Providence, R.I. - Privately held Nortek has begun soliciting votes from debt holders to approve a financial restructuring that would swap most of the company's debt for equity.
Balloting ends Oct. 16, according to New York City-based Financial Balloting Group, Nortek's balloting agent. If debtholders approve the plan, Nortek will file Chapter 11 to get the approval of a bankruptcy court to execute the agreement.
| TWICE Blog: Nortek Won't Talk, But The Numbers Will |
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.
If the plan is approved, about $1.3 billion out of a total $2.05 billion in debt will be eliminated, the company said.
Earlier this month, Nortek announced that a "substantial portion of its bondholders" had already agreed to its planned restructuring, but those bondholders did not yet include owners of $750 million in 10 percent notes due in 2013. Under the planned restructuring, their indebtedness would either be "reinstated," or it would be "modified" along with note holders getting "some portion of the equity," a Nortek statement said.
Nortek has struggled with servicing debt while revenues have fallen in the wake of the sharp decline in residential and commercial construction.