Two US manufacturers file for bankruptcy

[FrankRep]

Two U.S. manufacturers file for bankruptcy

Reuters
July 13, 2009


Two U.S. manufacturers filed for bankruptcy on Monday with combined debts of about $600 million, both victims of the economic recession and frozen credit markets.

One of the companies is RathGibson Inc of Lincolnshire, Illinois, which manufactures custom tubing and pipes for the chemical, energy and pharmaceutical industries, among others. RathGibson, which is owned by senior management and DLJ Merchant Banking Partners, a unit of Credit Suisse Group AG(CSGN.VX), said in court documents its revenues were cut by the economic slowdown and the value of its inventory dropped, leaving it unable to borrow.

"This is seen as very very positive for us to emerge stronger on the backside of this," said Kirk Thorne, a RathGibson spokesman, said of the filing.

He said the company was caught between its high leverage as a result of its acquisition by DLJ and a steep decline in business at many of its customers, which include Dow Chemical Co (DOW.N) and BASF (BASF.DE).

To fund its operations during bankruptcy, it plans to borrow $80 million from Wayzata Opportunities Fund II, which recently acquired the company's secured debt. Wayzata will own the majority of the company's equity under its planned reorganization, according to court documents.

The company said it had $305.1 million of assets and $319.2 million of debt as of April 30, with 521 full-time employees.

The second company filing for bankruptcy is J.L. French Automotive Castings Inc of Sheboygan, Wisconsin, which produces aluminum die-cast auto parts and has suffered as the demand for light vehicles in the United States has dropped sharply in recent years.


SOURCE:
http://www.reuters.com/article/marketsNews/idINN1316435420090713?rpc=44

 

[chris198]

My dad works for RathGibson in a NJ plant, well, this sucks.

 

[LiveFree79]

WTF? Who runs these f'ing companies. I mean do they not SAVE anything ever? There are so many companies out there that make money. What the hell do they do with all their money? Just spend it? Invest it? Don't any of these companies put cash away for a rainy day?

 

[HOLLYWOOD]

WTF? Who runs these f'ing companies. I mean do they not SAVE anything ever? There are so many companies out there that make money. What the hell do they do with all their money? Just spend it? Invest it? Don't any of these companies put cash away for a rainy day?

Hee Hee... these companies were doing the same thing that GM did spend BILLIONS/MILLIONS on stock buybacks to: Inflate the price of the stock and their mega Option holdings/Inflate in value to cash in, control the board of directors with bonus rewards, and proxies by having a majority controlling stake, which in reflection gives them at the top even more bonuses and monetary rewards.

Then when it all collapses... the FASCIST States of America (Federal/State Governments, collude/steals from the people to bail them all out. Still I haven't seen any one key in on the $10's of billions in government subsidies/tax breaks for Auto manufacturers to meet CAFE/EPA standards, which were given a 12 year compliance window from 1992-2004. No one has ever thoroughly analyzed that scam to the American Taxpayers, but forcing bankruptcy on a subsidiary for mistakes is a great out eh?

Just make sure to donate to the party/regime in currently in power if you want to survived this fascist country.

 

[Pauliana]

WTF? Who runs these f'ing companies. I mean do they not SAVE anything ever? There are so many companies out there that make money. What the hell do they do with all their money? Just spend it? Invest it? Don't any of these companies put cash away for a rainy day?

What if they burned through all of their savings?

 

[Agent CSL]

WTF? Who runs these f'ing companies. I mean do they not SAVE anything ever? There are so many companies out there that make money. What the hell do they do with all their money? Just spend it? Invest it? Don't any of these companies put cash away for a rainy day?

If they put cash away they would not appear as big as they might appear if they inflated their stock values. The game we play today is about potential earnings, not actual earnings. Investors invest based on speculation of how much money they can make. If a company puts some of their earnings into stocks, and the stock market is going up, then the company's potential earnings are HUGE - thus they get more investors.

It sounds illogical but you have to look at it from the point of an investor. Are you going to invest in a company who puts their earnings into savings? NO, because it does not benefit you. The price of this company's stock isn't going to rise very much.

 

[LibertyIn08]

This restructuring is due to the parent company, DLG, purchasing RG through a leveraged buyout.

Leveraged buyouts utilize extreme debt to purchase the company. The new parent company then shreds apart the purchased company, in hopes of making it more efficient, or at least appear more efficient. The new parent company then floats an IPO and pays off part of the new debt, netting itself a nice profit.

However, if an issue comes up, the parent company will often force the purchased company into bankruptcy to help with the process of reorganizing the company.

 

[LibertyIn08]

If they put cash away they would not appear as big as they might appear if they inflated their stock values. The game we play today is about potential earnings, not actual earnings. Investors invest based on speculation of how much money they can make. If a company puts some of their earnings into stocks, and the stock market is going up, then the company's potential earnings are HUGE - thus they get more investors.

It sounds illogical but you have to look at it from the point of an investor. Are you going to invest in a company who puts their earnings into savings? NO, because it does not benefit you. The price of this company's stock isn't going to rise very much.

The debt levels of RG aren't due to not saving - they were incurred by DLG's leveraged buyout. They have little to do with the day-to-day operations of the company.