Set-top repair specialist Contec has won court of approval of a plan to reorganize and emerge from Chapter 11 bankruptcy proceedings minus about $300 million in long-term debt.
The plan aims to reduce the company’s debt from about $350 million to to about $52.5 million, according to reports. Contec Holdings, owned by Bain Capital, entered Chapter 11 documents filed Aug. 29. Bain acquired Contec in 2008 from America Capital Ltd.
Contec said the reorganization plan has been approved by its key creditors. Senior lenders led by Barclays, will end up with the majority of the new equity in the restructured company, as well as $27.5 million in new second-lien term notes. Subordinated noteholders owed $159 million would get warrants to purchase new shares, while unsecured trade creditors would get cash.
Some senior lenders have created a pool of $35 million in bankruptcy financing and agreed to provide a $25 million bankruptcy-exit loan.
"This was the critical milestone in our reorganization process," commented Lawrence Young, interim chief executive officer of Contec. "With the support of our lenders, we were able to reduce our debt by over $250 million and obtain an incremental $25 million in financing, to aggressively pursue growth opportunities."
"Day-to-day operations have not been impacted by this process, and our customers, employees and suppliers have been extremely supportive of us during this period," said Wes Hoffman, Chief Operating Officer of Contec. "We stake our reputation every day on being the industry leader in providing repair and logistics solutions for our customers while saving time, improving quality and reducing cost." Hoffman continued, "We look forward to aggressively pursuing our growth plans and strategic partnerships to expand into a more diverse menu of service offerings."
Contec, founded in 1978, refurbishes millions of digital cable set-top units, modems and satellite receivers each year. It has repair plants in Schenectady, Seattle, Mexico City and Matamoros, Mexico. The company attributed its bankruptcy "to fast-paced and drastic technological and economic changes" that resulted in a decline in demand for cable services. Leading in to the Chapter 11 filing, the company had been experiencing steadily declining revenue.