Fort Mill, S.C.-based polyester fiber and packaging resins manufacturer Wellman Inc. has filed
voluntary petitions for reorganization under Chapter 11 of the US Bankruptcy Code for the Southern
District of New York.
“Although the company has taken numerous steps to reduce its debt and strengthen its balance
sheet through the disposition of certain businesses, headcount reductions and other cost
reductions, these actions were not sufficient to offset the deterioration in business conditions
and the cost of our substantial debt obligations,” said Thomas Duff, chairman and CEO, Wellman. “
Filing for Chapter 11 allows us to continue operating our business without interruption while
continuing to pursue our previously announced strategic alternative process.”
Difficulties encountered by the company include competitive challenges in the commodities
market in which it is primarily involved, including very tight margins resulting from raw material
supply and pricing, capacity utilization, customer demand and competition; and damage and
disruption of operations at its facility in Bay St. Louis, Miss., caused by Hurricane Katrina in
August 2005. Wellman’s recent efforts to streamline operations and refinance debt, and the sale
last summer of its European business have not been sufficient to reverse the company’s fortunes.
Wellman announced in late October 2007 that it had engaged New York City-based investment
bank Lazard Frères & Co. LLC to assist it in exploring strategic alternatives (See “Wellman’s
Board Explores Strategic Alternatives,” www.TextileWorld.com, Nov. 6, 2007). These strategic
alternatives include the potential sale of the company.
The company has received a commitment for debtor-in-possession financing of up to $225
million from its existing revolving credit facility lenders. This financing will be added to cash
from operations to cover operating expenses, including employee and supplier expenses, during the
reorganization period.
“I would like to thank our customers and vendors for their continued support during this
process,” Duff said. “We also appreciate the ongoing loyalty and support of our employees, whose
dedication and hard work are critical to our success and to the future of the company. Our
management team is committed to making this reorganization successful and leading Wellman toward a
bright future.”
February 26, 2008
