Print and marketing company Standard Register has filed for a Chapter 11 bankruptcy reorganization as part of which it would be sold to existing lender Silver Point Capital for about $275 million.
According to a bankruptcy petition filed Thursday, the company, which has been suffering from declining demand for printed forms and training and enrollment materials, has $453 million in assets and estimated total liabilities of $583.5 million. Silver Point Capital is a private investment firm managing approximately $8.5 billion.
The sale will “right-size the business’s balance sheet by significantly reducing its outstanding indebtedness and other liabilities to better position the business for long-term growth and profitability in the hands of a capable buyer,” Standard Register said in a news release.
The agreement with Silver Point, however, could be trumped by higher offers at a court-supervised auction. Proceeds of the sale will be used to repay the company’s creditors, Reuters reports, with shareholders likely being left with nothing.
Standard Register stock plunged 71% on Thursday to 12 cents each, and the company urged “extreme caution” in the trading of its shares.
Standard Register’s main creditor is the federal pension safety net, the Pension Benefit Guaranty Corp., which is owed nearly $195 million. The company’s debt also includes nearly $184 million worth of loans the company incurred with the 2013 acquisition of WorkflowOne LLC, according to documents filed with the U.S. Bankruptcy Court in Delaware.
CEO Joseph Morgan said Standard Register has “a fundamentally stable underlying business,” but “our ability to invest in growth has been hampered by our debt structure and legacy liabilities.”
“The board and management team have conducted a rigorous assessment of all of our strategic options and believe that [the Chapter 11] process represents the best possible solution for Standard Register,” he said.
An initial court hearing is scheduled for Friday, when a judge will review a $30 million bankruptcy loan offer from Silver Point and a $125 million bankruptcy loan offer from Wells Fargo and Bank of America.
In another corporate bankruptcy, auto parts supplier Chassix Holdings filed for Chapter 11 protection on Thursday. The Southfield, Mich.-based company’s restructuring plan has the support of a majority of its shareholders, according to the Wall Street Journal.
Chassix is owned by Platinum Equity LLC and in its Chapter 11 filing claimed $883 million in assets and $784 million in liabilities.