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Xerium operations hinge on April 12 DIP loan commitment deadline
By Caroline Salls
Pittsburgh, March 26 - Xerium Technologies, Inc. has secured a commitment for $80 million in debtor-in-possession financing that would be used if the company files for Chapter 11 bankruptcy, according to a 10-K filed with the Securities and Exchange Commission.
The company said the DIP loan commitment expires on April 12 and would require bankruptcy court approval. As a result, Xerium said it is important that it files for bankruptcy in time to obtain court approval of the DIP facility to give it enough funds to continue its operations while in bankruptcy.
If it decides to implement an out-of-court restructuring, the company said it would complete the restructuring before the expiration of the DIP loan commitment.
Xerium said it would risk having insufficient funds should it be later forced to file for bankruptcy if the out-of-court restructuring is not completed by the financing commitment expiration date.
Also, the company said it could lose access to cash from its operations or lose control of assets if any of its foreign subsidiaries were forced to launch insolvency proceedings after the commitment expired.
According to the 10-K, Xerium's principal liquidity requirements are for debt service, working capital and capital expenditures.
The company said it plans to use cash generated by its operations as its primary source of liquidity, but revenues and profits may not generate enough cash to fund its operations or meet other liquidity requirements.
Xerium is a Raleigh, N.C.-based manufacturer of industrial textiles and rolls used primarily in the paper production process.
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