Reaches restructuring agreement with its lenders, expects normal operations to continue
RISMEDIA, Feb. 6, 2008–SIRVA, Inc. (SIRV.PK), a global relocation services provider, announced Tuesday that it reached an agreement with its lenders to restructure its senior secured debt through a voluntary, pre-packaged Chapter 11 reorganization, which will allow it to finalize the restructuring of its debt while continuing to operate its business and serve its customers. SIRVA’s operations outside of the U.S. are not part of the Chapter 11 filing.
SIRVA said it is taking this action to free up its operations from a heavy debt service burden and to strengthen its balance sheet so that it is better positioned to weather the continuing weak U.S. housing market. The restructuring is embodied in a plan of reorganization which received overwhelming support from the Company’s lenders. The plan will reduce SIRVA’s outstanding bank debt by approximately $200 million and annual cash interest expense by approximately $54 million. As a result of the plan, the outstanding capital stock of the Company will be cancelled upon consummation of the restructuring.
“SIRVA undertook a comprehensive strategic review to evaluate all the options for restructuring our balance sheet and, after careful consideration, determined that a pre-packaged Chapter 11 filing provided the most efficient way forward for the Company,” said Robert W. Tieken, chief executive officer. “We believe this approach is in the best interest of our employees, customers, agents and suppliers because it reduces the excessive amount of interest expense we had to pay, allowing us to dedicate more of our capital to our business operations.”
The Company emphasized the Chapter 11 filing will not impact day-to-day operations for employees, customers, agents, suppliers and general business operations in the U.S. SIRVA has sought, and expects to receive, authority to continue to operate on a normal basis during the in-court restructuring, which it expects to complete in 60 to 90 days.
These “first-day motions” would ensure that employee pay and benefits are fully protected, all current and future obligations to its customers and agents are fulfilled, and suppliers will be paid in full. Furthermore, as part of its agreement with its lenders, SIRVA will provide a full recovery to the vast majority of its general unsecured creditors.
To supplement its liquidity position, the Company has arranged for debtor-in-possession (“DIP”) financing, with an initial commitment of $150 million, from members of its current lender group. The DIP financing will convert into a $215 million senior secured credit facility upon emergence, $130 million of which will be available for revolver borrowings and letters of credit.
“Our financing commitment provides additional reassurance to employees, customers, agents and suppliers that we can meet all of our ongoing commitments,” said Tieken.
“The ability to come to a consensual debt-for-equity agreement with our lenders demonstrates our lenders’ belief in SIRVA’s business model and their long-term faith in the Company,” continued Tieken. “When our financial restructuring efforts are complete, we will be in a better position to serve our customers and capitalize on new opportunities within the global relocation landscape.”
The Company and its domestic subsidiaries filed their voluntary Chapter 11 petitions in U.S. Bankruptcy Court for the Southern District of New York. The main case has been assigned case number 08-10375. Additional information about SIRVA’s restructuring is available at the Company’s website www.sirva.com or via the Company’s restructuring information line, 1-866-668-3001.
For access to Court documents and other general information about the Chapter 11 cases, visit www.kccllc.net/sirva.
More information about SIRVA can be found on the Company’s Web site at www.sirva.com.