Fansteel Wellman Dynamics administration filed for bankruptcy about a week ago, the second bankruptcy for the company in the past 15 years.
Fansteel Chief Restructuring Officer Ronald Reuter said the bankruptcy was for the purpose of addressing a maturing bank note sold to a third party.
“The company board made a decision, as an opportunity to address this senior lending creditor that holds a security interest in Wellman, to transition to a strategic lending relationship,” Reuter said.
The bankruptcy was filed under chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court, Southern District of Iowa, which is described as a reorganization. In this type of financial decision, a plan of reorganization is proposed in order to keep the business going and jobs in place.
“A financial plan had already been underway several months prior to improve the company’s financial future, unlike the recent past,” said James Mahoney, Fansteel chief executive officer. “The plan has led to identifying substantial improvements and production opportunities with its current worldwide customers. The link with the customers is projected to lead Wellman in the near term to a more profitable and growing business.”
The restructuring plan is still early in the proceedings. Reuter said a plan like this generally requires presentation of approval of the classes of creditors within 180 days and leads to a confirmed plan requiring court approval within a year.
“Wellman is expecting no interruption of business during this time,” Reuter said.
Mahoney also explained employees’ pay, schedule and benefits are currently unchanged, and that administrators have been meeting with employees to answer questions as the reorganization proceeds.
The company filed for chapter 11 bankruptcy in January 2002, after quarterly losses of more than $80 million and the closing of a plant in Muskogee, Oklahoma. In November 2003, the reorganization plan was approved and Fansteel was brought out of bankruptcy.
According to a press release, operating under the protection of chapter 11 reorganization will provide the company’s vendors with assurances that they will be paid for products and services on a going-forward basis so as to ensure stable manufacturing to serve its customers in the normal course. The release also said the restructuring plan will position Fansteel Wellman Dynamics with a stronger business foundation, ultimately leading to expanded order volume for its vendors and a wider array of manufacturing capabilities for its customer base, which has continued to increase.
“We look forward to the reorganization process as a means to significantly strengthen both our income statement and balance sheet,” Mahoney said. “We have moved forward with this reorganization, confident that the bold steps taken will bring satisfaction and value to our customers, employees, suppliers and the communities in which we operate.”
Mahoney iterated the reorganization will be a benefit to the business, which will help everyone connected to Fansteel.
“We genuinely appreciate the loyal support Fansteel has received from our customers and suppliers, and employees. We expect the reorganization process to restore Fansteel to a solid financial footing for years to come, which will justify and reward their support,” Mahoney said. “Wellman is a great company and important to the local community, supporting hundreds of jobs an an irreplaceable role in supporting America’s defense for more than five decades.”
Fansteel Wellman Dynamics is a leading manufacturer of precision-engineered cast components for global aerospace, defense and industrial markets.
It was founded in 1907 and employs more than 600 people across the globe. Headquartered in Creston, it’s one of a select number of manufacturers in the world with the expertise and capacity to produce large-scale, highly complex magnesium and aluminum alloy castings to meet design and performance demands of the largest aerospace and defense companies.