By Greg Grisolano
news@joplinglobe.com
PITTSBURG, Kan. — The corporate parent of a Pittsburg manufacturing company is working with lenders to avoid bankruptcy, according to a company spokesman and documents filed with the U.S. Securities and Exchange Commission.
Masonite International, an interior-, exterior- and garage-door manufacturer based in Florida, has a manufacturing plant in Pittsburg that produces interior and exterior doors.
The company announced Nov. 28 in a statement on its Web site that it has entered into an amendment with its lenders for an extension of a forbearance agreement the company signed in September. The extension provides the company additional time to develop a revised business plan for 2009.
Michael Freitag, a spokesman for Masonite, said officials are looking at “strengthening the company’s balance sheets,” rather than restructuring.
“In the current economic environment, you can never say never, but the current focus is on financial issues, not operational issues,” Freitag said Friday. “The current issue is the company has a significant amount of debt on its balance sheet. They are talking to bond holders to reduce the debt and the interest expense that goes with it.”
Third-quarter sales for the company declined 14 percent compared with third-quarter sales in 2007, according to Masonite filings. Gross profits decreased more than 40 percent, from $121.2 million in 2007 to $72.1 million in 2008.
Chief Executive Officer Fred Lynch said in a statement that the loss stems from an “unprecedented” decline in housing markets.
“We continue to work with our bank lenders and bondholders on developing an appropriate capital structure to support our long-term business objectives,” Lynch said.
Freitag said the company is expected to make an offer to trade some of its privately held stock to lenders in exchange for debt forgiveness.
“We haven’t specified the precise way we would reduce the debt, but it would probably result in some kind of transaction where the debt is exchanged for equity in the company,” he said.
The city of Pittsburg already took a serious economic hit earlier this year, when its third-largest employer, Superior Industries, announced it was shutting down a wheel-manufacturing plant that employed more than 600 people. The plant rolled out its last wheel earlier this month, and all operations are expected to cease Friday.
Masonite’s forbearance agreement termination date is Dec. 19 or any other event of default, whichever is earlier.
The December deadline may be extended to Jan. 15 if Masonite provides a draft business plan and reviews it with lenders. That January deadline also may be extended if the company has delivered a final business plan by that date.
Major player
With more than 225 employees, the Masonite manufacturing plant in Pittsburg is one of the city’s top 12 employers, said Mark Turnbull, Pittsburg’s economic development director. The company reached an agreement about a year ago to purchase a 66,150-square-foot building from the city for just over $933,000. As part of the deal, Turnbull said, the city agreed to repave the adjacent 36,000-square-foot parking lot, at a cost of $200,000.
“Pittsburg and a lot of other cities are trying to work with our businesses and support them as we can,” Turnbull said. “In all communications we’ve had with them, they’ve been very positive about production and hitting targets in the Pittsburg facility.”
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