SIRVA Reaches Restructuring Agreement with its Lenders
Files Pre-Packaged Plan of Reorganization; Secures $150 Million DIP Financing Facility, to Convert to $215 Million; Senior Secured Exit Facility; Expects Normal Operations to Continue; Only U.S. Operations are Part of Filing
CHICAGO, Feb. 5 /PRNewswire-FirstCall/ -- SIRVA, Inc. (Pink Sheets :
SIRV.PK), a global relocation services provider, today announced that it
reached an agreement with its lenders to restructure its senior secured
debt through a voluntary, pre-packaged Chapter 11 reorganization, which
will allow it to finalize the restructuring of its debt while continuing to
operate its business and serve its customers. SIRVA's operations outside of
the U.S. are not part of the Chapter 11 filing.
SIRVA said it is taking this action to free up its operations from a
heavy debt service burden and to strengthen its balance sheet so that it is
better positioned to weather the continuing weak U.S. housing market. The
restructuring is embodied in a plan of reorganization which received
overwhelming support from the Company's lenders. The plan will reduce
SIRVA's outstanding bank debt by approximately $200 million and annual cash
interest expense by approximately $54 million. As a result of the plan, the
outstanding capital stock of the Company will be cancelled upon
consummation of the restructuring.
"SIRVA undertook a comprehensive strategic review to evaluate all the
options for restructuring our balance sheet and, after careful
consideration, determined that a pre-packaged Chapter 11 filing provided
the most efficient way forward for the Company," said Robert W. Tieken,
chief executive officer. "We believe this approach is in the best interest
of our employees, customers, agents and suppliers because it reduces the
excessive amount of interest expense we had to pay, allowing us to dedicate
more of our capital to our business operations."
The Company emphasized the Chapter 11 filing will not impact day-to-day
operations for employees, customers, agents, suppliers and general business
operations in the U.S. SIRVA has sought, and expects to receive, authority
to continue to operate on a normal basis during the in-court restructuring,
which it expects to complete in 60 to 90 days. These "first-day motions"
would ensure that employee pay and benefits are fully protected, all
current and future obligations to its customers and agents are fulfilled,
and suppliers will be paid in full. Furthermore, as part of its agreement
with its lenders, SIRVA will provide a full recovery to the vast majority
of its general unsecured creditors.
To supplement its liquidity position, the Company has arranged for
debtor- in-possession ("DIP") financing, with an initial commitment of $150
million, from members of its current lender group. The DIP financing will
convert into a $215 million senior secured credit facility upon emergence,
$130 million of which will be available for revolver borrowings and letters
of credit.
"Our financing commitment provides additional reassurance to employees,
customers, agents and suppliers that we can meet all of our ongoing
commitments," said Mr. Tieken.
"The ability to come to a consensual debt-for-equity agreement with our
lenders demonstrates our lenders' belief in SIRVA's business model and
their long-term faith in the Company," continued Mr. Tieken. "When our
financial restructuring efforts are complete, we will be in a better
position to serve our customers and capitalize on new opportunities within
the global relocation landscape."
The Company and its domestic subsidiaries filed their voluntary Chapter
11 petitions in U.S. Bankruptcy Court for the Southern District of New
York. The main case has been assigned case number 08-10375. Additional
information about SIRVA's restructuring is available at the Company's
website http://www.sirva.com or via the Company's restructuring information line,
1-866-668-3001. For access to Court documents and other general information
about the Chapter 11 cases, please visit http://www.kccllc.net/sirva.
About SIRVA, Inc.
SIRVA, Inc. is a leading provider of relocation solutions to a well-
established and diverse customer base around the world. The Company handles
all aspects of relocation, including home purchase and home sale services,
household goods moving, mortgage services and home closing and settlement
services. SIRVA conducts more than 300,000 relocations per year,
transferring corporate and government employees along with individual
consumers. SIRVA's well-recognized brands include Allied, Allied
International, Allied Pickfords, Allied Special Products, DJK Residential,
Global, northAmerican, northAmerican International, Pickfords, SIRVA
Mortgage, SIRVA Relocation and SIRVA Settlement. More information about
SIRVA can be found on the Company's Web site at http://www.sirva.com.
Forward-Looking Statements
This release includes forward-looking statements within the meaning of
the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking
statements are not historical, but are made based on management's current
expectations and beliefs concerning future developments and their potential
effects upon SIRVA, Inc. and its subsidiaries. There can be no assurance
that future developments affecting the Company will be those anticipated by
management. These forward-looking statements are not a guarantee of future
performance and involve risks, uncertainties and other factors, including,
without limitation: (i) the ability of the Company to continue as a going
concern; (ii) the ability of the Company to obtain court approval for, and
operate subject to, the terms of the DIP financing facility; (iii) the
Company's ability to obtain court approval with respect to motions in the
Chapter 11 proceeding prosecuted by it from time to time; (iv) the ability
of the Company to develop, prosecute, confirm and consummate one or more
plans of reorganization with respect to the Chapter 11 cases, including a
plan consistent with the terms set forth in the plan of reorganization; (v)
risks associated with a termination of the agreement and financing
availability; (vi) risks associated with third parties seeking and
obtaining court approval to terminate or shorten the exclusivity period for
the Company to propose and confirm one or more plans of reorganization, for
the appointment of a Chapter 11 trustee or to convert the cases to Chapter
7 cases; (vii) the ability of the Company to obtain and maintain normal
terms with customers, agents, and suppliers; (viii) the Company's ability
to maintain contracts and leases that are critical to its operations; and
(ix) the potential adverse impact of the Chapter 11 cases on the Company's
liquidity or results of operations. Other factors that could cause actual
results to differ materially from these forward-looking statements include
risks described under the caption "Risk Factors" and elsewhere in the
Company's 2006 Annual Report on Form 10-K and 2007 third quarter Quarterly
Report of Form 10-Q. The Company does not intend, and is under no
obligation, to update any particular forward-looking statement included in
this release.
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