Citation Corp. files bankruptcy: No jobs will be lost at Columbiana foam plant
Citation Corp., the parent company of Columbiana-based Citation Foam, has filed for bankruptcy for the second time since 2004.
The company is currently working on a recapitalization plan in federal court, which Citation leaders hope will help further rebuild the company.
&8220;We are in a much better position today than we were three years ago,&8221; said Ed Buker, Citation&8217;s president and chief executive officer.
Buker said the bank agreements signed in 2004 did not anticipate cuts in the automotive industry, the reason behind the most recent filing.
Gene Monteith, of Cochran Group Inc., the company handling press for Citation, said this is not the typical Chapter 11 filing. He said the company has not run out of money but is attempting to maintain its balance sheet.
&8220;They were going to be paying $21 million a year in debt and the only way to remedy that is to recapitalize and prevent the debt from becoming unmanageable in the future,&8221; Montieth said.
Under the recapitalization plan, Citation will not seek concessions and will continue paying suppliers on normal terms.
Citation&8217;s major constituencies accepted plan details in advance which should allow the court process to be completed in 30-to-60 days, instead of the typical six to 12 month process.
Citation&8217;s plan will convert $160 million of the company&8217;s debt to 100 percent of the common equity. The remaining $30 million will be converted into PIK debt that does not mature until 2013.
The bankruptcy is not expected to affect employment at any of the company&8217;s plants. Citation produces cast and machined components for the automotive, heavy truck, construction, agricultural and commercial industries