NEWS RELEASE
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CONTACT: Tom Armstrong
Kevin McDermed
913 367 2121
OTCBB:AHNC.OB
Atchison Casting Corporation
Files for Protection Under Chapter 11
Atchison, Kan., August 4--Atchison Casting Corporation (OTC Bulletin Board:
AHNC.OB) today announced that it and its U.S. subsidiaries (with the exception
of The G&C Foundry Company) have filed a voluntary petition for reorganization.
ACC filed its voluntary petition in the U.S. Bankruptcy Court in the Western
District of Missouri, located in Kansas City, Missouri. ACC has requested that
the filings be jointly administered for procedural purposes. ACC's Canadian and
U.K. operations have not been included in any bankruptcy filings and are
operating as usual. Substantially all of the assets of G&C are expected to be
sold within 30 days.
"Over the past several months the management of the Atchison Casting
Corporation has worked diligently with our bankers to develop a debt
restructuring plan that would lead to an extension of the credit agreement to
September 2004," said Tom Armstrong, ACC's President. "Unfortunately, we have
been unable to reach an agreement and are now filing a voluntary petition for
Chapter 11 reorganization with the U.S. Bankruptcy Court."
ACC has secured a $7.5 million debtor-in-possession (DIP) financing
facility with Harris Trust & Savings Bank as Agent for the lending group. This
financing will be used to supplement ACC's existing cash flow during the
reorganization process and ensures post-petition payment of payroll and
benefits, payments to vendors, as well as other normal operating costs. ACC
intends to sell its remaining businesses and assets as a going concern for the
highest value. Management is unable to predict how much cash will be generated
from these sales or how much money, if any, will be available to pay unsecured
creditors. At this time, it appears unlikely that any funds will be left for
stockholders. The Company will be filing monthly financial reports in the
bankruptcy case.
"After our long struggle to survive against the backdrop of the
recession in the manufacturing sector, too much debt and related costs, and
closures and sales of
ATCHISON CASTING CORPORATION
400 SOUTH FOURTH STREET ª P.O. BOX 188 ª ATCHISON, KANSAS 66002-0188
ª (913) 367-2121 ª FAX (913) 367-2155
unprofitable operations, among other things, this filing should enable our core
operations to continue to operate while we offer them for sale, which provides
the best opportunity for our employees, customers, vendors and creditors going
forward. To continue to burden our core operations with these costs would
ultimately lead to their deterioration, thereby jeopardizing their future," said
Kevin McDermed, ACC's Chief Financial Officer.
ACC produces iron, steel and non-ferrous castings for a wide variety of
equipment, capital goods and consumer markets.
This press release contains forward-looking statements that involve
risks and uncertainties. Such statements include the Company's expectations as
to future performance and contingent obligations. Among the factors that could
cause actual results to differ materially from the forward looking statements
are the following: the need for bankruptcy court approvals, the ability to
successfully complete proposed sales of business operations, access to cash
collateral, the adequacy of and compliance with the DIP financing, stability of
customer demand and supplier support, the many uncertainties involved in
operating a business in a Chapter 11 bankruptcy environment, the re-audit of any
financial statements, the sale of subsidiaries for which offers are being
solicited, costs of closing or selling foundries, the results of the liquidation
of Fonderie d'Autun, the amount of any claims made against Fonderie d'Autun's
prior owner which are the subject of certain guarantees, business conditions and
the state of the general economy in Europe and the U.S., particularly the
capital goods industry, the strength of the U.S. dollar, British pound sterling
and the Euro, interest rates, utility rates, the availability of labor, the
successful conclusion of union contract negotiations, the results of any
litigation arising out of the accident at Jahn Foundry, results of any
regulatory proceedings arising from the accounting irregularities at the
Pennsylvania Foundry Group, the competitive environment in the casting industry
and changes in laws and regulations that govern the Company's business,
particularly environmental regulations.
ATCHISON CASTING CORPORATION
400 SOUTH FOURTH STREET ª P.O. BOX 188 ª ATCHISON, KANSAS 66002-0188
ª (913) 367-2121 ª FAX (913) 367-2155
