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Robertshaw Files Chapter 11, Enters Restructuring Support Agreement

February 15, 2024, 07:47 AM
Filed Under: Bankruptcy

Robertshaw US Holding Corporation and certain of its U.S. affiliates, a leading global design, engineering, and manufacturing company, has commenced a financial restructuring process to improve its capital structure, strengthen its business, and position the Company for future growth. To effectuate a transaction and with the support of key financial stakeholders, Robertshaw has filed voluntary petitions for Chapter 11 relief in the United States Bankruptcy Court for the Southern District of Texas (the “Court”).

The Company has entered into a Restructuring Support Agreement (“RSA”) with a group of significant financial partners. Pursuant to the RSA, the financial partners have put forward a Stalking Horse Bid (the “Stalking Horse Bid”) to recapitalize the business. The transaction contemplated by the RSA will enable the Company to eliminate approximately $670 million of debt, significantly strengthening the Company’s financial position and ability to effectively compete and serve its customers for the long term. Through the Chapter 11 cases, the Company will conduct a court-supervised process to determine if there are other potential acquirers for its business who will offer a purchase price higher than the Stalking Horse Bid.

“Today’s announcement is an important step forward to strengthen our financial foundation and enable us to further invest in the business for the benefit of our customers,” said John Hewitt, CEO of Robertshaw. “With a much-improved balance sheet, we will be well-positioned to maintain and further strengthen our position as a global market leader in the design, engineering, and manufacturing of flow control components, systems, and technologies, and further innovate in safe and reliable solutions and cutting-edge technologies. Throughout this process, we remain grateful to our team and are laser-focused on delivering best-in-class service and products to our customers that increase safety, improve productivity, and protect the environment.”

At the outset of the Chapter 11 cases, Robertshaw will use its cash on hand to continue to provide best-in-class products and service to customers and fulfill obligations to suppliers. Robertshaw plans to obtain $56 million in proceeds of debtor-in-possession financing from certain secured lenders, subject to certain conditions.

The Company has also sought to use the Chapter 11 process to resolve, in an expeditious and efficient manner, the claims asserted in two state court litigations related to prior balance sheet transactions. The Company believes that a speedy resolution through the Chapter 11 cases of the claims alleged in these two actions is the most efficient path to address these issues, while minimizing the value-destructive impacts of two costly and protracted state court litigations.

Robertshaw has filed a number of customary motions with the Court to facilitate a smooth transition into Chapter 11 and support operations throughout the process. The Company intends to operate without disruption during the process, including continuing to pay employee wages and benefits, maintaining customer programs, and honoring obligations to vendors.

Robertshaw’s Canada, EMEA, Mexico, Asia, South America, and other operations outside of the U.S. are not part of the court-supervised Chapter 11 process, and the Company expects little to no disruption to its manufacturing, distribution, or engineering centers in these regions.

Latham & Watkins LLP and Hunton Andrews Kurth LLP are serving as legal counsel, Guggenheim Securities, LLC is serving as investment banker, AlixPartners LLP is serving as financial advisor, and C Street Advisory Group is serving as strategic communications advisor.

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