AMPAM Reorganizes Under Chapter 11
In an interview with The News, Robert Nagel, AMPAM corporate executive vice president, said his company "will consider all of our options in developing our proposed reorganization plan."
Nagel did not speculate on whether the restructuring plan would result in the sale of any of the existing operations, but said, "Our goal has been, and always will be, to optimize and maximize the value of all of our businesses. This has recently led to the sale of our commercial operation based in Ohio and our single-family plumbing operation in Charlotte, N.C."
The financial restructuring plan proposes to restructure the terms of the company's senior debt obligations and convert the company's subordinated debt into preferred stock. The company announced that it has negotiated a financial restructuring plan with its senior lenders designed to significantly reduce the debt on its balance sheet and strengthen the company's overall financial position.
Nagel said that AMPAM had not envisioned the external business factors that had an eventual adverse effect on his company's ability to operate profitably.
"When AMPAM initially came together approximately four years ago, the company had a strategy of becoming a publicly held company," he stated. "In the past year, we have found that this was unattainable for a variety of reasons, including adverse conditions in the general economy, capital markets, and the business challenges in our commercial operations. Other consolidators with a similar capital market strategy also experienced the same types of issues as AMPAM.
"These issues were simply unforeseeable."
Staying The CourseNagel made it very clear that the people who mean the most to AMPAM - its customers and employees - should not be affected by the Chapter 11 reorganization. As Dec. 31, 2002, AMPAM employed more than 5,500 people in 18 states.
"As a result of AMPAM's re-structuring, our core businesses will be able to compete more effectively for our existing and future customers," he said. "In addition, during the initial hearings, the bankruptcy court approved all of our first-day motions. The relief granted will enable us to continue on a business-as-usual basis with our customers and suppliers during the restructuring process.
"We do not envision any type of companywide layoffs as a result of this restructuring. We are in the service business and our employees are and will continue to be our biggest, most significant asset. It is important to note that our businesses are solid and continue to generate positive cash flow from operations. The primary purpose for filing bankruptcy is to alleviate the financial strain imposed as a result of our current corporate capital structure in a quick and efficient manner."
Nagel said that his company plans to stay the course. "Going forward, the company will concentrate on its core strengths: residential plumbing, heating, ventilation, and air conditioning contracting, specifically in the area of single-family and multifamily residential new construction," he said. "AMPAM's short- and long-term goal will be to maximize the value of all of our businesses."
In a company press release, AMPAM's chairman of the board and CEO, Robert Christianson, stated, "This restructuring plan will enable AMPAM to operate with minimal disruption to our employees, customers, and vendors. Our top priority continues to be reaching our full potential as a company and providing our stakeholders with the best prospects for realizing the value from the company's businesses."
AMPAM's revenue in fiscal 2002 was $575 million, with a nearly $55 million loss.
For more information on AMPAM, visit www.ampam.com.
Publication date: 11/03/2003