Powermate files Chapter 11 bankruptcy to liquidate assets

By Caroline Salls

Pittsburgh, March 19 - Powermate Corp. filed for Chapter 11 bankruptcy Monday in the U.S. Bankruptcy Court for the District of Delaware.

According to court documents, a global decline in sales in the back-up power industry, rising commodity prices and unprofitable contracts lead to a decline in the company's operating performance.

Powermate completed the sale of its compressor business earlier this month.

Although the company also marketed substantially all of its remaining assets before the bankruptcy filing, its board of directors decided an orderly liquidation of the assets would maximize the company's value and help to avoid risks associated with an asset sale.

In connection with the filing, Powermate is seeking court approval of $15 million in debtor-in-possession financing. Wachovia Bank, NA is the administrative agent.

Interest on revolving DIP loans will be Prime rate plus 200 basis points, and interest on term loans will be Prime rate plus 400 bps.

The DIP facility will mature on the earlier of May 31 and upon confirmation of the company's plan of reorganization.

The company will pay a $500,000 DIP financing fee.

Powermate was granted interim access to the DIP facility on Tuesday. The final hearing is scheduled for April 15.

Proceeds will be used to pay Powermate's expenses during its bankruptcy case.

The company listed $1 million to $10 million in assets and $50 million to $100 million in debt.

Powermate's largest unsecured creditors include:

• Robin America Inc., Chicago, with a $4.03 million trade debt claim;

• Sumec Machinery & Electric Co. Ltd., Nanjing, China, with a $2.79 million trade debt claim;

• American Honda Motor Co. Inc., Torrance, Calif., with a $2.6 million trade debt claim;

• Zhejiang Xinlie Mechanical & Electrical Co., Ltd., ZheJiang, China, with a $1.99 million trade debt claim;

• Tecumseh Power Co., Charlotte, N.C., with a $1.86 million trade debt claim;

• Ningbo Alton Mechanical & Elec. Co., Ningbo, China, with a $1.85 million trade debt claim;

• Sumec Hardware & Tools Co. Ltd., Nanjing, China, with a $1.78 million trade debt claim;

• A.O. Smith Corp., Cleveland, with a $1.48 million trade debt claim; and

• Chongqinq Senci Electric Machinery, Chongqing, China, with a $1.29 million trade debt claim.

Powermate is an Aurora, Ill.-based manufacturer of portable and standby electric generators, air compressors, air tools, pressure washers and accessories. Its Chapter 11 case number is 08-10498.

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