A little over a year ago, the former LED magazine Editor-in-Chief Maury Wright spoke with Lumileds CEO Matt Roney about the LED maker’s growth trajectory amid challenging supply chain conditions and application segments for future expansion. the company. Today, the San Jose, California-based lighting solutions company announced that it has entered into a Restructuring Support Agreement (RSA) with its majority lenders to implement a Chapter 11 plan. prepackaged.
Lumileds said in its press release that the company “has obtained the necessary support from its lenders to confirm the plan prior to initiating its process and expects to meet the requirements to confirm the plan and exit Chapter 11 within a timely manner. about sixty days.
The Chapter 11 plan was filed in the U.S. Bankruptcy Court for the Southern District of New York. The procedure only concerns the Netherlands – where the company’s debt is held – and American companies – where the credit agreements are held.
Under the RSA, Lumileds expects its funded debt to be reduced by $1.7 billion to $400 million. This includes up to $275 million in debtor-in-possession (DIP) financing from some of its lenders to allow the company to continue operations, compensate employees and meet its financial obligations to customers, vendors and suppliers. Under the terms of the agreement, current owner and investment firm Apollo Global Management will relinquish control of the company; creditors including Anchorage Capital Group, Nut Tree Capital Management and Brigade Capital Management would provide the capital injection.
In the Lumileds press release, CEO Matt Roney emphasized the “proactive” nature of the financial restructuring and that it will help the company achieve the long-term goals and market position he set out there. a year ago. “This recapitalization will allow us to further accelerate our efforts as a market-leading innovator within the specialty lighting industry,” Roney said. “We believe the most effective and efficient way to achieve this is to go through a pre-packaged Chapter 11 process that will come with a significant increase in our liquidity position.”
Lumileds will continue to operate “as usual,” continuing its technology development and innovation without as many interest charges looming after the end of the Chapter 11 period.
According to sources, “a perfect storm” of circumstances, including pandemic lockdowns, manufacturing shortages and the war between Ukraine and Russia impacting transportation and supply, affected the timing for Previously discussed growth markets such as automotive LEDs are materializing.
With existing secured lenders on board to support the RSA, the schedule for the plan appears to be achievable. “We appreciate the support of our lenders, who recognize the long-term value and increased potential that Lumileds will create with a strengthened balance sheet,” Roney said in the announcement.
Lumileds’ official investment bank is Evercore, with AlixPartners as financial advisor, and the firms Paul, Weiss, Rifkind, Wharton & Garrison, LLP and Lathan & Watkins LLP as corporate and restructuring counsel. The RSA and supporting documents can be accessed from Epiq Corporate Restructuring.
CARRIE MEADOWS is editor-in-chief of LEDs Magazine, with 20 years of B2B publishing experience in technology markets including semiconductor technology manufacturing, fiber optic communications, machine vision, lasers and photonics, as well as than LEDs and lighting.
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