AGY Holding Corp., formerly Advanced Glassfiber Yarns, LLC, headquartered in Aiken, South Carolina, one of the largest global suppliers of glassfiber yarns used for electronic, industrial, constructio…
AGY Holding Corp., formerly Advanced Glassfiber Yarns, LLC, headquartered in Aiken, South Carolina, one of the largest global suppliers of glassfiber yarns used for electronic, industrial, construction and specialty applications, announced 5 April 2004 that it has emerged from Chapter 11 bankruptcy protection and has appointed Douglas J. Mattscheck as the a new President and CEO. In a press release, AGY said that high debt levels, economic recession, falling product prices and demand, and the shift of its core electronics business to Asia caused it to file for voluntary reorganization under Chapter 11 in December 2002. AGY retained Carl Marks Consulting Group, LLC (CMCG) to lead its turnaround and restructuring efforts and fill the interim roles of Chief Restructuring Officer (CRO) and Chief Operating Officer (COO). AGY management worked closely with CMCG to develop and implement a successful operating and financial reorganization strategy. The reorganization plan, confirmed by the bankruptcy court on 8 March 2004, includes a USD 120 million rollover term loan with Wachovia Bank as agent and a USD 30 million working capital facility with CIT. During the pendency of the bankruptcy, AGY generated over USD 8 million of surplus cash. Half of the surplus will be used to pay down the emergence rollover debt and the other half will be paid to the pre-petition lenders. AGY“s corporate structure has been converted from an LLC into a “C” Corporation, primarily owned by its pre-petition senior secured lending group. Its senior unsecured notes have been cancelled, along with all equity interests of the former owners. “We are very excited with the progress and achievements during the last 15 months,” said Marc Pfefferle, Chief Restructuring Officer of AGY and Managing Director of CMCG. “AGY management and CMCG successfully worked together to allow AGY to emerge on solid financial footing and put the company in the position to achieve profitable and sustainable growth. During the Chapter 11 period, the Company retained 100% of its customer base and made significant progress in new product and process developments.” An in-depth evaluation of AGY“s product mix was carried out to refocus the business on profitable niche and specialty markets and rationalize its production capacity. A number of actions were implemented during the reorganization period to improve AGY“s long term cost position and support future profitable growth. These actions included a 16% reduction in salaried staffing levels, converting fixed-based pension contributions to a performance-based approach and utilizing Section 1113 provisions in the Bankruptcy Code and extensive negotiations to modify existing collective bargaining agreements at the company“s main manufacturing plants which was achieved without a work stoppage and which reduced labor and benefit costs by approximately USD 6.1 million a year. Benefits under AGY“s post-retirement medical plan exceeded those of comparable companies. After a thorough analysis, benefit levels were amended through Section 1114 provisions of the Code, resulting in a reduction of approximately USD 2 million in annual expense and approximately USD 22 million in related balance sheet liability. In consideration of these savings and sacrifices, the company implemented a performance bonus program that will enable all employees to participate in AGY“s future success. Additionally, AGY renegotiated numerous executory contracts and leases under provisions of the Code to further improve its cost and cash flow position, along with renegotiating various contracts affiliated with its former owners into arms-length agreements. These and other actions generated another USD 2 million-plus in annual savings. Pfefferle said that while AGY“s reorganization had been a great success by any measure, such success would not have been possible without strong customer, vendor and constituent support, the enormous effort and painful sacrifices made by AGY“s 900-plus employees and the efforts by AGY“s labor unions to save jobs. “While much work remains, we are pleased with AGY“s progress thus far and the Company is well positioned to meet its future goals” he said The Board of Directors of AGY Holding Corp., elected Douglas J. Mattscheck, 48, president and chief executive officer of AGY, effective immediately. Mattscheck joins AGY after seven years as president of St. Gobain Technical Fabrics, headquartered in Niagara Falls, New York. Under his leadership, the business grew from a relatively small operation to one of the world“s largest weavers and fabricators of glass fiber reinforcements. “Through my experience in the glass industry, I am already familiar with the company“s products and markets,” Mattscheck said. “Now, as AGY emerges from bankruptcy, the company is poised to invest in the future and grow. I look forward to being part of that process.”