Commercial Metal Forming’s Parent Files Chapter 11
YOUNGSTOWN, Ohio – Operations will continue “uninterrupted” at Commercial Metal Forming Co’s plant here following Monday’s Chapter 11 bankruptcy filing by its New Jersey-based parent company, Constellation Enterprises LLC.
The CMF plant, 1775 Logan Ave., makes tank heads and custom stampings. Employment is expected to remain at present levels while the reorganization transitions ownership to the parent company’s senior secured note holders, according to a news release from Constellation Enterprises.
The bankruptcy petition, filed in Delaware, will enable Constellation “to implement a financial restructuring that will bring its debt in line with current market conditions,” the company said.
Constellation also operates Jorgensen Forge Corp., a forging and machining operation in Tukwila, Wash., Zero Manufacturing, an aluminum fabricator in Utah, and Columbus Casting, a manufacturer of steel castings in Columbus.
Like Commercial Metal Forming, Jorgensen Forge and Zero Manufacturing will continue to operate, the parent company said, but operations at Columbus Casting were halted May 9 while a sale of that business, which employed 752, is pursued.
At May 17, Constellation’s balance sheet reflected total assets of approximately $196 million and total liabilities of $238 million. Its debt consisted of $165.1 million in secured funded debt and $61.5 million of unsecured debt, including $32.5 million in pension and tax liabilities, customers’ advances and trade debt.
The holders of Constellation’s senior secured notes have agreed to provide debtor-in-possession financing to the company, and have provided a bid to purchase substantially all of the assets of Commercial Metal Forming, Jorgensen and Zero.
Constellation said it has received a letter of intent “from an interested party for the acquisition of the assets of Columbus Castings.”
The note-holders’ proposal would be subject to a definitive asset purchase agreement as well as bankruptcy court approval. Constellation said it also would solicit competing bids from other potential purchasers and conduct a sales process approved by the court.
In addition to its plant here, Commercial Metal Forming owns and operates manufacturing facilities in Saginaw, Texas, and Orange, Calif. The company employs 164.
CMF was the only Constellation subsidiary that operated profitably in 2014, states a court-filed affidavit by Timothy B. Stallkamp, managing director of Conway MacKenzie Management Series LLC, a corporate turnaround consulting company hired last September.
Constellation says the Chapter 11 bankruptcy results from “significant operational issues at Columbus Castings,” weakness in the oil and gas and industry manufacturing sectors across its subsidiaries. “These issues stressed the group’s liquidity and challenged a balance sheet already burdened with high leverage,” the company said.
A hearing on first-day motions took place Wednesday in Wilmington, Del., before U.S. Judge Christopher S. Sontchi.
Pictured: Tank heads made by Commercial Metal Forming.
Copyright 2020 The Business Journal, Youngstown, Ohio.
CLICK HERE to subscribe to our print edition and sign up to our free daily headlines.