Masonite files for voluntary petition in US and Canada

Canadian doormaker Masonite International filed for chapter 11 bankruptcy today in the US bankruptcy court of the district of Delaware, and initiated voluntary reorganisation proceedings under the Companies' Creditors Arrangement Act in Canada in the Ontario Superior Court of Justice.

Under the reorganisation plan, Masonite aims to reduce its outstanding debt by $2 billion, from $2.2 billion today to $300 million, as well as reducing its annual cash interest costs by $145 million.

According to the press release, the plan proposes converting existing senior secured obligations on a pro rata basis, into new senior secured term loans of up to $200 million, new second-lien PIK loans of up to $100 million, and/or into 97.5% of common equity of the reorganised company. Additionally, senior subordinated notes will be converted to 2.5% of common equity in Masonite plus warrants for 17.5% of common stock.

Masonite missed an interest payment on 17 October 2008, and the expiration of the 30-day grace period triggered a loan-only credit default swap auction for settling trades referencing first lien loans of the company. The auction, which took place on 9 December 2008, produced recoveries of 52.5 cents in the dollar.