Label manufacturer Multi-Color Corporation, which employs around 13,000 people in 29 countries, has filed for Chapter 11 bankruptcy protection in the USA, in a so-called pre-negotiated version. This American equivalent of a French receivership procedure is designed to enable the manufacturer to restructure its debt. This debt amounts to $5.9 billion, on sales of $3 billion forecast for 2025.
At the same time, MCC, which has seven sites in France, signed a restructuring support agreement with its shareholder Clayton, Dubilier & Rice (CD&R) and the holders of around 72% of its senior secured debt.
The transaction would reduce net debt to $2.0 billion. Cash interest expense would be reduced from $475 million to $140 million in 2026. Long-term maturities would be extended to 2033. In addition, the restructuring agreement provides for an investment of $889 million in common and preferred shares, to support long-term growth and investment. MCC adds that, on completion of the restructuring, available liquidity would exceed $500 million. The agreement also includes $250 million in debtor-in-possession financing, intended to fund operations during the proceedings.
The agreement also stipulates that CD&R will remain a controlling shareholder following the transaction.
"Over the past two years, we have taken decisive steps on the commercial and operational fronts, while integrating top talent into our management team, to best position MCC for sustainable and profitable growth." said Hassan Rmaile, President and CEO of MCC. The American manufacturer also moved its headquarters last October, from Chicago to Atlanta.
"Our operational initiatives are bearing fruit, and optimizing our capital structure is an essential step in advancing our growth strategy." he adds.
MCC says it has applied for permits to continue operating "normally" and be able to pay salaries, suppliers and continue operations, and ensures that operations around the world should run their course throughout this process.
