Restoration Forest Products makes pre-packaged Chapter 11 filing

By Sarah Lizee

Olympia, Wash., Jan. 30 – Restoration Forest Products Group, LLC made a pre-packaged Chapter 11 bankruptcy filing in the U.S. Bankruptcy Court for the District of Delaware on Monday, according to a press release.

The debtor said in court documents that it has faced multiple challenges in completing construction of its facility in Bellemont, Ariz., which led to an overall delay of 16 months and cost increases of about $30 million.

The company said it has received $95 million in debtor-in-possession financing from funds managed by Invesco Senior Secured Management, Inc.

The financing consists of $29 million in new money multi-draw term loans, with the remaining amount being a rollup of prepetition bridge debt.

UMB Bank, NA is the administrative agent on the DIP financing, which will bear interest at 11% per annum and mature on May 31, 2024.

Fees include a $725,000 closing fee, $17,500 agency fee and 3% exit fee.

Upon completion of the Chapter 11 process, Invesco will become the new majority owner of the company in partnership with the existing equity sponsor, Lateral Investment Management.

Restoration Forest Products’ current capital structure includes about $64.34 million in bridge loans with Invesco, $128.87 million in series A bonds with Invesco, $107.37 million in series B bonds with Lateral and others and a $56.7 million loan agreement with Lateral.

The company intends to complete a restructuring plan that will strengthen its balance sheet and substantially reduce debt.

According to a disclosure statement filed Tuesday, the plan will result in the following:

• Conversion of about $35 million of DIP claims to an exit facility with the balance of DIP claims to receive their ratable share of new class A units, subject to dilution on account of the management incentive plan;

• Discharge of the bridge loan claims with the holders of such claims to receive their ratable share of the new class A units, subject to dilution;

• Discharge of the senior series A bond claims with the holders of such claims to receive their ratable share of new class A units, subject to dilution;

• Discharge of the subordinated series B bond claims with the holders of such claims to receive their ratable share of new class B units, subject to dilution;

• Discharge of about $307 million of prepetition claims in total; and

• Cancellation of equity interests.

Anthony J. “Tony” Flagor has been appointed as chief executive officer, effective Jan. 26.

The company said it continues to partner with the U.S. Forest Service and the Four Forest Restoration and invest in a combination of mechanical thinning capabilities and a large-scale manufacturing facility.

Construction of the facility in Bellemont, Ariz., is proceeding on schedule and is expected to be fully completed in the second quarter of 2024, with significant growth in production volume expected over this same timeframe, the company said.

“With a world-class facility and expanded talent and capacity to drive its wood products manufacturing operations, RFOR is strongly positioned to significantly expand its forest restoration initiatives while driving substantial value for critical regional stakeholders and investors,” the company said in the release.

Restoration Forest Products said it expects to continue operating as usual throughout the court-supervised process, including paying employee wages and benefits, and meeting its obligations to its suppliers and vendors in the ordinary course.

The company is hoping to receive confirmation of the pre-packaged plan within 60 days.

In its petition, the company reported $100 million to $500 million in assets and $100 million to $500 million in liabilities.

No unsecured creditors were listed with claims of $1 million or more.

Potter Anderson & Corroon LLP is serving as legal counsel, Intrepid Investment Bankers is serving as financial adviser, and Riveron Management Services is serving as chief restructuring officer to Restoration Forest Products.

The Bellemont, Ariz.-based sustainable forest products company filed Chapter 11 bankruptcy under case number 24-10120.

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