Chattanooga, Tenn.-based synthetic fiber manufacturer Propex Inc. filed for protection under Chapter 11 of the U.S. Bankruptcy Code in mid-January, a move management notes is aimed at improving the company's balance sheet. Propex will continue to operate plants and offices in the ordinary course of business while it restructures. It has arranged a $60 million credit facility Û for which it will be seeking Court approval Û that provides immediate and sufficient liquidity to operate the business on an ongoing basis, including maintaining payroll and employee benefits; all deliveries to customers; and, fulfillment of obligations to critical suppliers.
We believe the financial reorganization will allow us to implement a restructuring plan that will lower our debt levels and expand our market leadership in key sectors from a position of financial strength, said Propex President Joe Dana. During the past year, our entire industry has been hit hard by the general economic decline led by the deteriorating housing market, plus the escalating cost of raw materials. I am pleased we now have a way forward and appreciate the support of our valued customers, suppliers, lenders and employees.
Upon completion over a 12- to 18-month period, the Chapter 11 restructuring is expected to reduce debt and create additional cash flow that otherwise would be earmarked for debt service. The filing impacts Propex's U.S. operations, but not the company's Latin American and European units.