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Contacts: Investment Community Media
Steve Dalberth P.Y. Rockingham
Sunbeam Corporation Sunbeam Corporation
(561) 912-4800 (561) 912-4179
SUNBEAM CORPORATION ANNOUNCES
PLAN TO REORGANIZE UNDER CHAPTER 11
Company Will Continue to Conduct
Business as Usual for All Operating Businesses
Lenders Support Sunbeam's Plan and
Agree to Provide $485 Million of Credit
Boca Raton, FL, February 6, 2001 - Sunbeam Corporation (NYSE: SOC) announced
today that the Company has reached agreement with its secured creditors to
reorganize its debt and certain other obligations and will file today voluntary
petitions for itself and its domestic operating subsidiaries under chapter 11 of
the U.S. Bankruptcy Code with the U.S. Bankruptcy Court in the Southern District
of New York. Sunbeam, with the support of its banks, is seeking immediate
authority from the court to pay in the ordinary course of business, as to its
pre-filing obligations, all vendors and employees of its operating subsidiaries.
As in all chapter 11 cases, post-petition obligations to vendors, employees and
others will be honored and satisfied in the normal course of business without
the need to obtain court approval. Sunbeam's operating businesses include
Sunbeam Products, which conducts the Household and Health businesses, The
Coleman Company, Coleman Powermate, Inc., and First Alert, Inc. The
international subsidiaries are not parties to the chapter 11 reorganization
cases and are not affected by them.
Today, the Company will file with the court proposed chapter 11 plans of
reorganization for Sunbeam and its operating subsidiaries and affiliates. The
reorganization plans contemplate converting a substantial portion of the
existing bank debt into term debt, convertible debt and equity interests in the
reorganized Sunbeam. The chapter 11 plans also contemplate the discharge of all
of the Company's securities-related litigation and bondholder debt. The chapter
11 plans are supported by the holders of the bank debt (approximately $1.7
billion). Sunbeam expects that the reorganized Company and its operating
subsidiaries and affiliates will emerge from the chapter 11 reorganization in
six to nine months.
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The Company also announced that its banks - Bank of America, First Union and
Morgan Stanley - have agreed to support Sunbeam through the chapter 11
reorganization by providing a new $285 million line of credit, which, upon court
approval, will be available for usage by all of Sunbeam's subsidiary business
units to fund normal operations. In addition, Sunbeam announced that the Company
has received a commitment from GE Capital Corporation for a new $200 million
accounts receivable financing program for Sunbeam's domestic businesses. These
facilities, which total $485 million, will allow the Company and its domestic
and international operating units to continue with business as usual.
Jerry W. Levin, Chairman and Chief Executive Officer of Sunbeam, said, "Chapter
11 reorganization provides a legal framework that allows us to keep the business
running normally while we put our financial house in order. When we emerge from
the proceedings in a matter of months, Sunbeam will be a stronger, more
competitive company."
Mr. Levin continued, "This was a difficult, but absolutely necessary decision
for us to make. It is, in fact, the only option that will free Sunbeam from its
overwhelming burden of debt and securities-related litigation expenses. Sunbeam
is a strong company, and with a new capital structure and the commitment of our
management team and our employees to execute our strategy, I believe Sunbeam
will become a truly great branded consumer products company, global in scope,
known for innovation and leadership in each market segment in which it
competes."
No Interruption in Production or Distribution - Business as Usual
The Company expects that there will be no interruption in production or
distribution. All vendors of the operating businesses will continue to be paid
in full in the normal course of business, as to post-petition obligations.
Subject to the court's approval, vendors of Sunbeam's operating subsidiaries
will be paid as to the pre-petition obligations in the normal course of
business. Sunbeam continues to be committed to, and fully in support of, all
sales plans and programs with its retailers. Sunbeam employees, worldwide, will
not experience any change in their job status or the work they do. The Company
does not anticipate any reductions in workforce or plant closings as a result of
the chapter 11 reorganization.
"Building on Foundation of Outstanding Brands and Reputation for Quality"
Mr. Levin said, "Over the past two and a half years, we struggled to find a
different solution for all our stakeholders. However, we were not able to reach
an agreement with all groups to satisfactorily restructure the financial
obligations of the Company. In addition, the depth of the problems facing
Sunbeam did not allow for any realistic choice other than to pursue the
necessary restructuring under chapter 11."
Mr. Levin concluded, "We intend for this restructuring of our financial
obligations to free Sunbeam from its debt burden and litigation expenses and put
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the reorganized Sunbeam on the track for economic viability and successful
operations. I look forward to working with our management team and dedicated
employees, as well as our suppliers and retailers, to continue to build on
Sunbeam's solid foundation of outstanding brands and a global reputation for
quality and dependability."
Senior Management Committed to Lead Company and Build on Progress
Senior management, including Mr. Levin, has committed to remain in place and
lead Sunbeam throughout this process and beyond. They have made substantial
progress and will continue their efforts to: streamline operations; institute
strict financial controls; improve the product mix; enhance research and
development; strengthen the brand names; provide superior customer and consumer
service; and build closer relationships for the company with vendors and
customers.
Background on Chapter 11
Chapter 11 of the U.S. Bankruptcy Code allows a company to continue to operate
its business and manage its assets in the ordinary course of business. Congress
enacted chapter 11 to avoid the negative effects of liquidation proceedings and
to enable a debtor business to preserve its going concern value and its
operations, as well as to provide its employees with jobs and to satisfy
creditor claims based upon the value of the reorganized company.
About Sunbeam
Sunbeam Corporation is a leading consumer products company that designs,
manufactures and markets, nationally and internationally, a diverse portfolio of
consumer products under such world-class brands as Sunbeam(R), Oster(R),
Grillmaster(R), Coleman(R), Mr. Coffee(R), First Alert(R), Powermate(R),
Health o meter(R) and Campingaz(R).
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