EXHIBIT 99.1
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Media Contact: Supplier Contact:
David Lanzillo 800-721-9884 (U.S.)
607-377-8259 (office) +852-2610-2323 (international)
607-368-0037 (mobile) suppliers@worldkitchen.com
WORLD KITCHEN AGREES ON TERMS OF FINANCIAL RESTRUCTURING WITH HOLDERS OF MORE
THAN 80% OF FUNDED DEBT
PROPOSED FINANCIAL RESTRUCTURING WILL REDUCE COMPANY'S DEBT FROM $812 MILLION TO
$373 MILLION AND BE IMPLEMENTED THROUGH VOLUNTARY CHAPTER 11 PROCEEDING
COMPANY PLANS TO MAINTAIN NORMAL OPERATIONS DURING REORGANIZATION PROCESS
JPMORGAN CHASE-LED BANK GROUP AGREES TO PROVIDE
UP TO $75 MILLION DEBTOR-IN-POSSESSION FINANCING PACKAGE
COMPANY EXPECTS TO EMERGE FROM CHAPTER 11 ON EXPEDITED TIMELINE
ELMIRA, NEW YORK, MAY 31, 2002 - WKI Holding Company, Inc. (WKI), which operates
principally through its subsidiary World Kitchen, Inc., today announced that it
has reached agreement on the terms of a financial restructuring with the
steering committee for its bank group and a group of affiliated parties that is
comprised of the Company's primary shareholder as well as its largest
bondholder, which holds approximately 40% of the outstanding senior subordinated
bonds. By reducing WKI's funded debt by approximately $440 million, from $812
million to $373 million, the debt restructuring will provide the Company with
more financial flexibility to implement its business strategy. To pursue the
financial restructuring, WKI and all of its direct and indirect wholly-owned
U.S. subsidiaries have filed voluntary petitions for reorganization under
chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy
Court for the Northern District of Illinois. Given that the proposed financial
restructuring has the support of parties representing more than 80% of the
Company's funded debt, the Company hopes to emerge from the chapter 11 process
on an expedited timeline. WKI expects to file a proposed plan of reorganization
in the near future, and will work expeditiously with its stakeholders to
finalize, obtain court approval for and implement the plan.
WKI intends to maintain normal business operations on a global basis during the
chapter 11 process, including at its non-U.S. subsidiaries, which are not
included in the chapter 11 proceedings. The Company will continue delivering all
of its customer orders on time and in full. It also will make timely payment for
goods and services provided on or after the filing date
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in the normal course of business and in accordance with the terms of existing
supplier agreements. It is anticipated that employees will be paid in the normal
manner and all health and welfare benefit plans will continue. The Company plans
to fund operations during the chapter 11 process with existing cash, cash flow
from operations and up to $75 million in a new debtor-in-possession financing
package that has been committed by a bank group led by JPMorgan Chase Bank.
The terms of the proposed financial restructuring include the conversion by the
bank group of $189 million of its debt into equity, conversion by an affiliated
lender of 100% of its separate $25 million credit facility claims into equity,
and the conversion of $200 million of senior subordinated bondholders' claims
into equity.
WKI's proposed financial restructuring represents a milestone in the Company's
turnaround, which began in early 2001, and initially focused on improving the
quality of its operations. During the chapter 11 process, WKI intends to
continue to make operational improvements while also increasing new product and
marketing initiatives geared toward enhancing its portfolio of well-known
housewares brands.
Steven G. Lamb, President and Chief Executive Officer of WKI, said: "When I
joined World Kitchen early last year, it was a company with considerable
potential - one with the finest brand portfolio in its industry - but in need of
considerable change in order to maximize the value of its industry-leading
assets. We have accomplished a lot during the past year by increasing supply
chain efficiency, improving our working capital management and enhancing
customer service. These initiatives have begun to bear fruit, as evidenced by
the positive response of our customers and improved financial results.
"This Company simply has too much debt to fully execute its business strategy.
The development of our proposed financial restructuring is an important
accomplishment and its implementation will give us financial flexibility to
operate our business more efficiently. Equally important, the support we have
received from our stakeholders in developing this plan illustrates their
confidence in World Kitchen's future prospects."
Mr. Lamb concluded: "While we regret the impact that our chapter 11 filing might
have on some of our constituencies, it is the right course of action to
establish a capital structure that will enable us to realize our full potential.
We are confident that we will be able to maintain business as usual during this
process, including payment for goods and services provided to us on or after the
filing date, full and timely deliveries of all customer orders, and normal
salary and benefits
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for our employees. Our objective is to complete the chapter 11 process as
quickly as possible so that we can focus on executing our business strategy,
delighting our customers and creating value for all of our stakeholders."
Patrick Daniello, a Managing Director of JPMorgan Chase Bank, which serves as
administrative agent for WKI's secured credit facility and as a member of the
bank steering committee, said: "The proposed financial restructuring being
contemplated with World Kitchen and the other parties is an effective step
towards positioning the Company to realize its full potential. We have
considerable confidence in what the Company's strong management team can achieve
once its debt has been reduced."
WKI and its U.S subsidiaries have filed a number of first-day motions with the
Bankruptcy Court in order to accomplish a smooth transition to chapter 11
without business disruption. The Company expects that these motions, which are
consistent with those made in other chapter 11 filings, will be addressed
promptly by the Bankruptcy Court. The motions include requests to pay employee
wages and benefits, honor pre-petition customer obligations and take other steps
to preserve business as usual to the maximum extent possible.
Suppliers with questions about the restructuring may call 800-721-9884 (in the
U.S.) or +852-2610-2323 (outside of the U.S.) or send an e-mail to
suppliers@worldkitchen.com.
About World Kitchen
World Kitchen's principal products are glass, glass ceramic and metal cookware,
bakeware, tabletop products and cutlery sold under well-known brands including
CorningWare, Pyrex, Corelle, Visions, Revere, EKCO, Baker's Secret, Chicago
Cutlery, Regent Sheffield, OXO and Grilla Gear. World Kitchen has been an
affiliate of Borden, Inc. and a member of the Borden Family of Companies since
April 1998. The Company currently employs approximately 3,200 people and has
major manufacturing and distribution operations in the United States, Canada,
South America and Asia-Pacific regions.
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