Nortek Gets Chapter 11 Approval, Reports Q3 Operating Profit
By Joseph Palenchar -- TWICE, 12/21/2009
PROVIDENCE, R.I. — The U.S. Bankruptcy Court for the District of Delaware approved Nortek's prepackaged Chapter 11 filing.
“Nortek expects to emerge from bankruptcy as a reorganized company as expeditiously as possible,” the owner of multiple custom-installation companies said in a prepared statement.
The company also announced that its operating earnings turned positive in the third quarter ending Oct. 3, and it substantially trimmed its net losses for the period.
Operating earnings came to $12.7 million in the third quarter compared to a year-ago operating loss of $579.6 million, which included the impact of a $600 million non-cash goodwill impairment charge. Net losses for the period were trimmed to $12.4 million from the year-ago $644.7 million net loss.
Third-quarter sales were off 22.4 percent to $451.8 million compared to the year-ago period.
For the nine-month period, sales were off 22 percent to $1.3 billion, and the company trimmed its operating loss by 66 percent to $173.4 million compared to the year-ago period. The nine-month net loss fell 55 percent to $290.5 million from the year-ago nine-month period.
The reorganization plan will eliminate about $1.3 billion out of a total $2.05 billion in debt, the company said. Nortek also has a commitment for a $250 million asset-backed credit facility that will be available for general business operations after the company emerges from Chapter 11. Nortek previously stated that it has no plans to sell any of its subsidiaries and anticipates no Nortek management changes.
In late October, the court approved multiple Nortek requests, including permission to pay trade creditors any balances incurred before the Oct. 21 Chapter 11 filing, pay all salaries and wages to employees, honor all customer programs and product warranties, and continue to use cash on hand for general business operations.
Nortek owns multiple companies that sell products for commercial and residential installation. In home technology, the company's brands include many of the major powers in the residential custom-install industry, such as Aton, Channel Plus, Elan, Gefen, Imerge, M&S, Niles, OmniMount, Panamax, SpeakerCraft, Sunfire and Xantech. The company also owns residential HVAC and ventilation companies and commercial HVAC suppliers.
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