================================================================= WERNER LADDER BANKRUPTCY NEWS Issue Number 1 ----------------------------------------------------------------- Copyright 2006 (ISSN XXXX-XXXX) June 14, 2006 ----------------------------------------------------------------- Bankruptcy Creditors' Service, Inc. 215-945-7000 FAX 215-945-7001 ----------------------------------------------------------------- WERNER LADDER BANKRUPTCY NEWS is published by Bankruptcy Creditors' Service, Inc., 572 Fernwood Lane, Fairless Hills, Pennsylvania 19030, on an ad hoc basis (generally every 10 to 20 days) as significant activity occurs in the Debtors' cases. New issues are prepared by Terence F. Casquejo, Carlo B. Fernandez, Christopher G. Patalinghug, Frauline S. Abangan and Peter A. Chapman, Editors. Subscription rate is US$45 per issue. Any re-mailing of WERNER LADDER BANKRUPTCY NEWS is prohibited. ================================================================= IN THIS ISSUE ------------- [00000] HOW TO SUBSCRIBE TO WERNER LADDER BANKRUPTCY NEWS [00001] BACKGROUND & DESCRIPTION OF WERNER HOLDING CO. [00002] WERNER HOLDING'S BALANCE SHEET AS OF SEPTEMBER 30, 2005 [00003] COMPANY'S PRESS RELEASE ANNOUNCING CHAPTER 11 FILING [00004] WERNER HOLDING'S CHAPTER 11 DATABASE [00005] LIST OF WERNER HOLDING'S 30 LARGEST UNSECURED CREDITORS [00006] DEBTORS' MOTION FOR JOINT ADMINISTRATION OF CASES [00007] DEBTORS' MOTION FOR AUTHORITY TO USE CASH COLLATERAL [00008] DEBTORS' MOTION TO OBTAIN $99,000,000 OF DIP FINANCING [00009] DEBTORS' MOTION TO ENTER INTO RE-PURCHASE AGREEMENT [00010] WERNER CO. RECEIVES COURT APPROVAL OF FIRST DAY MOTIONS [00011] U.S. TRUSTEE SETS ORGANIZATIONAL MEETING FOR JUNE 22 KEY DATE CALENDAR ----------------- 06/12/06 Voluntary Petition Date 06/22/06 Organizational Meeting to Form Creditors' Committees 07/12/06 Deadline to Provide Utilities With Adequate Assurance 07/12/06 Deadline to File Schedules of Assets & Liabilities 07/12/06 Deadline to File Statements of Financial Affairs 07/12/06 Deadline to File Lists of Leases and Contracts 09/10/06 Deadline to remove actions under FRBP 9027 10/10/06 Deadline to make decisions about lease depositions 10/10/06 Expiration of Exclusive Plan Proposal Period 12/09/06 Expiration of Exclusive Solicitation Period 06/11/08 Deadline to Commence Avoidance Actions First Meeting of Creditors under 11 USC Sec. 341 Bar Date for filing Proofs of Claim ----------------------------------------------------------------- [00000] HOW TO SUBSCRIBE TO WERNER LADDER BANKRUPTCY NEWS ----------------------------------------------------------------- WERNER LADDER BANKRUPTCY NEWS is distributed to paying subscribers by electronic mail. 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Name: ---------------------------------------------- Firm: ---------------------------------------------- Address: ---------------------------------------------- ---------------------------------------------- Phone: ---------------------------------------------- Fax: ---------------------------------------------- E-Mail: ---------------------------------------------- (Distribution to multiple professionals at the same firm is provided at no additional cost.) WERNER LADDER BANKRUPTCY NEWS is distributed to paying subscribers by electronic mail. New issues are published on an ad hoc basis as significant activity occurs (generally every 10 to 20 days) in the Debtors' chapter 11 proceedings. The subscription rate is US$45 per issue. Newsletters are delivered via e-mail; invoices, transmitted following publication of each newsletter issue, arrive by fax. Re-mailing of WERNER LADDER BANKRUPTCY NEWS is prohibited. Distribution to multiple individuals at the same firm is provided at no additional charge; folks outside of your firm should set-up and pay for their own subscriptions. Subscriptions may be canceled at any time without further obligation. ----------------------------------------------------------------- [00001] BACKGROUND & DESCRIPTION OF WERNER HOLDING CO. ----------------------------------------------------------------- Werner Holding Co., (PA), Inc. 93 Werner Rd. Greenville, Pennsylvania 16125 Telephone (724) 588-2550 http://www.wernerladder.com/ Werner is the largest manufacturer and marketer of ladders and other climbing equipment in the United States. Werner Holding Co., (PA), Inc., is the parent of Werner Holding Co., (DE), Inc., which, in turn, is the parent of Werner Co. Werner PA and Werner DE have no substantial operations. Werner Co. is the principal operating company. WIP Technologies, Inc., a wholly owned subsidiary of Werner Co., holds the intellectual property for the Company. Werner produces five principal categories of climbing equipment: (1) single and twin stepladders; (2) extension, fixed and multipurpose ladders; (3) attic ladders; (4) stages, planks work platforms, and scaffolds; and (5) assorted climbing product accessories. Larry V. Friend, vice president, chief financial officer and treasurer of Werner Holding Co. (DE), Inc., relates that majority of the Company's climbing product sales are of either aluminum or fiberglass ladders. Werner's climbing products are sold directly to customers and through approximately 45 independent, commissioned manufacturer's representative organizations, which sell to four major distribution channels: (1) home improvement (2) hardware (3) professional (4) other retail Lowe's Companies, Inc. (NYSE: LOW), with nearly 1,100 retail stores in 48 states, is Werner's largest customer. Lowe's accounted for nearly 1/3 of the home improvement retailer's 2004 sales. Home Depot, Inc. (NYSE: HD), which accounted for about 1/4 of 2003 sales, gave Werner the boot in early-2004, when it started importing cheaper ladders directly from China. The Company's principal executive offices is in Greenville, Pennsylvania. As of June 12, 2006, Werner employed 1,189 salaried and hourly employees. The Company operates manufacturing facilities in: (1) Chicago, Illinois (2) Merced, California (3) Juarez, Mexico Werner maintains numerous distribution facilities throughout the United States. Mr. Friend reports that for the year ending December 31, 2005, the Company's audited net sales, on a consolidated basis, total $472,354,000. As of March 31, 2006, the Company's unaudited balance sheet reflected total assets, on a consolidated basis, of $201,042,000 and total liabilities of $473,447,000. Road to Bankruptcy Mr. Friend notes that the Werner entities are highly leveraged and are facing the maturity of significant portions of debt in their current capital structure. The Company is also in the process of undergoing a significant operational restructuring, which includes transferring operations to a new facility in Juarez, Mexico. Werner, a major consumer of aluminum, has experienced significant constraints on profit margins and liquidity as the market price for aluminum has increased dramatically. Werner brought experts on board to help solve its financial problems. Specifically, the Company retained Rothschild, Inc., as its financial advisors and investment bankers, and Loughlin Meghji & Company, as its restructuring consultants to assist them in identifying and considering options relating to refinancing, raising new capital and restructuring existing debt. According to Mr. Friend, Rothschild and LM+Co have explored out- of-court restructuring options and have entered into discussions with Werner's prepetition lenders to pursue a consensual restructuring of its debt. The Company has pursued other alternatives to improve its liquidity position, including the sale of certain business segments and other assets. However, due to its current liquidity constraints, Mr. Friend says, Werner is forced to seek to reorganize utilizing the protections available to them under Chapter 11 of the Bankruptcy Code. ----------------------------------------------------------------- [00002] WERNER HOLDING'S BALANCE SHEET AS OF SEPTEMBER 30, 2005 ----------------------------------------------------------------- WERNER HOLDING CO. (PA), INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEET As of September 30, 2005 Assets Current assets: Cash and cash equivalents $718,000 Accounts receivable - Allowance for doubtful accounts - Note receivable from related party 51,007,000 Income taxes receivable 7,617,000 Inventories 66,902,000 Deferred income taxes - Other 3,887,000 ------------ Total current assets 130,131,000 ------------ Property, plant and equipment, net 108,964,000 ------------ Other assets: Deferred income taxes - Deferred financing fees, net 13,095,000 Other 7,333,000 ------------ Total other assets 20,428,000 ------------ Total assets $259,523,000 ============ Liabilities Current liabilities: Accounts payable $24,848,000 Accrued liabilities 34,313,000 Current maturities of long-term debt 1,563,000 ------------ Total current liabilities 60,724,000 ------------ Long-term obligations: Long-term debt 344,598,000 Reserve for product liability and workers' compensation claims 42,563,000 Other long-term obligations 34,804,000 ------------ Total liabilities 482,689,000 ------------ Convertible preferred stock 89,076,000 ------------ Shareholders' deficit: Common stock 1,000 Additional paid-in-capital 28,531,000 Accumulated deficit (326,054,000) Accumulated other comprehensive loss (14,344,000) Notes receivable arising from stock loan plan (376,000) ------------ Total shareholders' deficit (312,242,000) ------------ Total liabilities, preferred stock and shareholders' deficit $259,523,000 ============ ----------------------------------------------------------------- [00003] COMPANY'S PRESS RELEASE ANNOUNCING CHAPTER 11 FILING ----------------------------------------------------------------- * $99 Million Debtor-In-Possession Financing Commitment from Black Diamond Commercial Finance To Support Continued Operations * Will Complete Operational Restructuring Plan Already Underway * Company Will Seek to Implement a Capital Structure That Provides Long-Term Financial Flexibility GREENVILLE, Pennsylvania -- June 12, 2006 -- Werner Co. announced today that it and several affiliated companies have filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code. Werner has taken this action to implement a financial restructuring that will provide the financial flexibility and support to complete the operational restructuring already underway. Werner's strategy is to become the low-cost producer of ladders and other climbing products and leverage the Werner brand to drive future growth. Werner expects to continue to operate in the normal course of business during the Chapter 11 reorganization process. All of the Company's manufacturing and distribution facilities are open and continuing to serve customers in the normal course. To help fund its operations during the reorganization process, Werner has secured a commitment for $99 million in debtor-in-possession (DIP) financing from Black Diamond Commercial Finance. Subject to court approval, these funds will be available to satisfy obligations associated with conducting the company's business, including payment to suppliers under normal terms for goods and services provided after the Chapter 11 filing and payment of wages and benefits to employees and independent sales representatives. Steven P. Richman, Werner's President and Chief Executive Officer, said: "The strategic repositioning of Werner is well underway. In the past few years, we have moved significant production to Mexico and China in an effort to become the low- cost provider of climbing products. We have revitalized our product development team, resulting in the planned rollout of 15 new products and brand extensions over the next year. The Werner brand is stronger than ever and it is clearly the number one choice for the professional end user." He continued, "In recent years, however, Werner has been constrained by its highly leveraged capital structure and by the continuing unprecedented high prices for aluminum and other raw materials. Quite simply, we have too much debt. We intend to use the Chapter 11 process to reduce this debt significantly and develop and implement a new capital structure that will allow us to invest in the business." Mr. Richman concluded, "Fortunately, the fundamentals of our business remain strong and provide an excellent foundation for the future. We expect that Werner will emerge from its Chapter 11 reorganization a stronger, more financially stable company, well- positioned for profitable growth." Werner expects its operations to function normally during the Chapter 11 process, with little impact on how it conducts business: * Customers will be served in the normal course. Werner's manufacturing and distribution facilities are open on normal schedules, and the company expects to continue to fulfill customer orders and provide uninterrupted customer service. * Suppliers will be paid. Werner plans to continue paying suppliers for all goods and services they provide after the filing. * Employees will continue to be paid. Werner plans to provide all wages and benefits for active employees as usual and without interruption. Likewise, the company plans to provide its independent sales representatives with their usual commissions on a timely basis. The Chapter 11 filings by Werner and its affiliates were made today in the U.S. Bankruptcy Court for the District of Delaware. Werner's principal legal advisors for the Chapter 11 proceedings are Willkie Farr & Gallagher LLP and Young Conaway Stargatt & Taylor LLP. The Company's financial advisors are Rothschild Inc. with Loughlin Meghji + Co. assisting Werner with its operational restructuring. More information about Werner's reorganization is available on the Company's Web site at http://www.wernerladder.com/ About Werner Werner Co. is the world's leading manufacturer and distributor of ladders, climbing equipment and ladder accessories. Backed by over 50 years of product innovation, Werner leads the industry with its commitment to the design and manufacture of quality products that meet or exceed applicable Occupational Safety and Health Administration (OSHA) and American National Standards Institute (ANSI) codes and standards for strength and structural integrity. Werner is headquartered in Greenville, Pennsylvania. ----------------------------------------------------------------- [00004] WERNER HOLDING'S CHAPTER 11 DATABASE ----------------------------------------------------------------- Debtor: Werner Holding Co. (DE), Inc. aka Ad Valorem Properties, Inc. aka ARDEE Investment Co., Inc. aka Wentworth Institutional Realty, Inc. aka Manufacturers Indemnity& Insurance Company of America aka Werner Financial Inc. aka Olympus Properties, Inc. aka Werner Ladder Company aka Florida Ladder Company aka Gold Medal Ladder Company 1105 North Market Street, Suite 1300 Wilmington, Delaware 19801 Bankruptcy Case No.: 06-10578 Debtor-affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Werner Holding Co. (PA), Inc. 06-10579 Werner Co. 06-10580 WIP Technologies, Inc. 06-10581 Chapter 11 Petition Date: June 12, 2006 Court: District of Delaware (Delaware) Judge: Kevin J. Carey Debtors' Counsel: Kara Hammond Coyle, Esq. Matthew Barry Lunn, Esq. Robert S. Brady, Esq. Young, Conaway, Stargatt & Taylor, LLP The Brandywine Building, 17th Floor 1000 West Street, P.O. Box 391 Wilmington, Delaware 19899 Tel: (302) 571-6600 Fax: (302) 571-1253 Debtors' Co-Counsel: Matthew A. Feldman, Esq. Willkie Farr & Gallagher LLP 787 Seventh Avenue New York, New York 10019-6099 Tel: (212) 728-8000 Fax: (212) 728-8111 http://www.willkie.com/ Debtors' Claims Agent: Kurtzman Carson Consultants LLC 1180 Avenue of the Americas, Suite 1140 New York, New York 10036 Tel: (866) 381-9100 Fax: (310) 823-9133 http://www.kccllc.com/ Debtors' Financial Advisor and Investment Banker: Rothschild Inc. 1251 Avenue of the Americas, 44th Floor New York, New York 10020 http://www.us.rothschild.com/ Debtors' Restructuring Consultants: Loughlin Meghji & Company 48 Madison Avenue, Suite 800 New York, New York 10016 Tel: (212) 340-8420 Fax: (212) 725-9322 http://www.lmco-ny.com/ Debtors' Consolidated Total Assets and Liabilities as of March 31, 2006: Total Assets: $201,042,000 Total Debts: $473,447,000 ----------------------------------------------------------------- [00005] LIST OF WERNER HOLDING'S 30 LARGEST UNSECURED CREDITORS ----------------------------------------------------------------- Claim Amount as of Entity Nature of Claim May 31, 2006 ------ --------------- ------------ The Bank of New York Note Debt $142,782,780 (Trustee for the Notes) 101 Barclay Street - 8W New York, NY 10286 Attn: Mary Lagumina Tel: (212) 815-4812 Fax: (212) 815-7760 Werner Enterprises, Inc. Shipping $1,696,621 14507 Frontier Road Omaha, NE 68138 Attn: John Steele Tel: (402) 894-3036 Fax: (402) 894-3990 WXP, Inc. - PS3 and Log Sales Trade Debt $1,242,307 93 Werner Road, Building A Greenville, PA 16125 Attn: John Thigpen Tel: (724) 588-2000 Fax: (724) 589-4286 Grupo American Industries Trade Debt $1,072,702 Washington 3701 ED 18 Chihuahua Chih CP 31200 Mexico Attn: Miriam Vazques Tel: (915) 309-4126 Fax: +011-52-656-629-2601 Saint-Gobain Vetrotex Trade Debt $821,362 America, Inc. 4515 Allendale Road Wichita Falls, TX 76310 Attn: Rick Fortune Tel: (440) 964-8820 Fax: (440) 964-5390 Owens Corning Fiberglass Trade Debt $593,921 One Owens Corning Parkway Toledo, OH 43659 Attn: Joe Arcadi Tel: (440) 286-5777 Fax: (800) 237-7755 Comor, Inc. Trade Debt $571,712 2164 Libre Comercio, Juarez Chihuahua, Mexico Attn: Bob Deets Tel: 011-52-656-171-9629 Fax: 011-52-656-171-9629 Venture Plastics, Inc. Trade Debt $566,946 P.O. Box 249 4000 Warren Road Newton Falls, OH 44444 Attn: Bryon Osborne Tel: (330) 872-5774 Fax: (330) 872-3597 Scanwell Logistics (LAX), Inc. Shipping $550,000 615 North Nash Street, Suite 202 El Segunod, CA 90245 Attn: Gino Lin Tel: (310) 640-8800 Fax: (310) 640-8808 AOC Trade Debt $525,148 2552 Industrial Drive Valparaiso, IN 46383 Attn: Clark Wade Tel: (614) 901-0798 Fax: (219) 465-4427 Century Industries, Inc. Trade Debt $467,252 2300 East 145th Street Little Rock, AR 72206 Attn: Scott Treadway Tel: (501) 897-5253 Fax: (501) 897-5320 EPI Printers, Inc. Trade Debt $281,717 P.O. Box 1025 5350 Dickman Road Battle Creek, MI 49016-1025 Attn: Ron Bosworth Tel: (724) 588-2000 ext. 2355 Fax: (269) 968-4260 Anixter Fasteners Trade Debt $277,942 1435 Henry Brennan Drive, Suite H El Paso, TX 79936 Attn: Tom Knottek Tel: (915) 860-6620 Fax: (915) 860-4898 Hollinee Glass Fibers Trade Debt $262,862 9702 Iron Point Road Shawnee, OH 43782 Attn: David Schumaker Tel: (740) 394-2491 Fax: (740) 394-2496 Bayloff Die & Machine Trade Debt $226,181 5910 Bellville Road Van Buren Twp, MI 48111 Attn: Richard Bayer Tel: (734) 397-9116 Fax: (734) 397-9125 Coinco, Inc. Trade Debt $213,648 P.O. Box 248 23727 U.S. Highway 322 Cochranton, PA 16314 Attn: Jim Cockley Tel: (814) 425-7407 Fax: (814) 425-7489 Suzhou Ronglida Tool Co. Ltd. Trade Debt $190,918 15#, Dongxin Road, Xukou Town Wuzhong District, Suzhou City Jiangsu Province, China Attn: Xiayan Xie/Jianyuan Zhang Tel: +86-512-6621-1567 Fax: +86-512-6621-4046 El Paso Tool & Die Trade Debt $160,784 10859 Pellicano Drive El Paso, TX 79935 Attn: Sal Robles Tel: (915) 591-0346 Fax: (915) 591-0390 Hua Feng Lock Products Ltd. Trade Debt $153,359 South yongNing Industrial Road XiaoLan, ZhongShan GuangDong, China 528415 Attn: Iris Lee/WenLie Ho Tel: +86-760-226-5895 ext. 858 Fax: +86-760-227-8063 Viking Tool & Gage, Inc. Trade Debt $151,608 11160 State Highway 18 Conneaut Lake, PA 16316 Attn: Brian Burns Tel: (814) 382-8691 Fax: (814) 382-5234 Goshen Stamping Co., Inc. Trade Debt $147,980 1025 South 10th Street Goshen, IN 46526-4401 Attn: Jerry Trolz Tel: (574) 533-4108 Fax: (574) 534-4189 St. Paul Travelers Insurance $145,720 Commercial Lines - National 300 Windsor Street Hartford, CT 06120 Attn: Peter A. Heard Tel: (860) 277-7827 Fax: (860) 277-2876 Yellow Freight Shipping $141,938 P.O. Box 13850 Newark, NJ 07188 Attn: Gerry Marra Tel: (412) 781-0578 Fax: (412) 781-9152 Brandywine Distribution Services Shipping $131,768 1330 East 12th Street Wilmington, DE 19802 Attn: Dane Waters Tel: (302) 652-7425 Fax: (302) 652-7426 Custom-Pak, Inc. Trade Debt $106,900 86-16th Avenue North Clinton, IA 52732 Attn: Clay Bahnsen Tel: (563) 242-1801 Fax: (563) 244-5325 Integrated Logistics Solutions Trade Debt $106,544 400 Commerce Boulevard Lawrence, PA 15055 Attn: Mickey Remich Tel: (724) 745-7900 Fax: (724) 745-7572 Paschall Truck Lines (PASC) Shipping $104,376 P.O. Box 1889 3443 Highway 641 South Murray, KY 42071 Attn: Allen Crowely Tel: (800) 626-3374 Fax: (270) 753-1904 Alcan Ingot & Recycling Trade Debt $102,019 6060 Parkland Boulevard Cleveland, OH 44124 Attn: Nancy Pudelsky Tel: (908) 369-2182 Fax: (440) 423-6668 United Parcel Service Shipping $92,383 P.O. Box 99985 Pittsburgh, PA 15233 Attn: Doug Fleming Tel: (814) 833-3670 Fax: (814) 835-2303 Southwest Tape & Label, Inc. Trade Debt $88,817 965 Loma Verde Drive El Paso, TX 79936 Attn: Michael Healy Tel: (915) 858-3381 Fax: (915) 858-8059 ----------------------------------------------------------------- [00006] DEBTORS' MOTION FOR JOINT ADMINISTRATION OF CASES ----------------------------------------------------------------- Rule 1015 of the Federal Rules of Bankruptcy Procedure authorizes the Court to order the joint administration of two or more pending cases involving affiliated debtors. Local Rule 1015-1 allows the Court enter a joint administration order without notice or hearing. By this motion, the Debtors ask the Court to consolidate their Chapter 11 cases for procedural purposes only. The Debtors believe that it would be far more practical and expedient for the administration of their Chapter 11 cases if the Court were to authorize their joint administration. The Debtors expect that many of the motions, hearings, and other matters will affect of them. "Consequently, joint administration will reduce costs and facilitate a more efficient administrative process, unencumbered by the procedural problems otherwise attendant to the administration of separate, albeit related, chapter 11 cases," Larry V. Friend, vice president, chief financial officer and treasurer of Werner Holding Co. (DE), Inc., says. * * * Judge Carey grants the Debtors' request and rules that all pleadings and papers filed in Werner's cases will be captioned: IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE ----------------------------------x In re : Chapter 11 : WERNER HOLDING CO. (DE), : Case No. 06-10578(KJC) INC., et al., : : (Jointly Administered) Debtors. : ----------------------------------x ----------------------------------------------------------------- [00007] DEBTORS' MOTION FOR AUTHORITY TO USE CASH COLLATERAL ----------------------------------------------------------------- Prior to the Petition Date, the Debtors obtained financing under: Agreement Amount --------- ------ First Lien Credit Facility $230,000,000 with JPMorgan Chase Bank, N.A., as administrative agent Second Lien Credit Facility $100,000,000 with Credit Suisse First Boston, as administrative agent Accounts Receivable Financing Facility $50,000,000 with The CIT Group Variable Rate Demand Industrial $5,000,000 Building Revenue Bonds 10% Series A Senior Subordinated Notes due November 15, 2007 $135,000,000 The First Lien Credit Facility was initially comprised of a $180,000,000 first lien term loan and a $50,000,000 first lien revolving credit facility. The available borrowings under the First Lien Revolving Credit Facility are reduced by the aggregate face amount of letters of credit issued and outstanding pursuant to a $35,000,000 letter of credit sub-facility. As of March 31, 2006, the borrowings outstanding under the First Lien Term Loan were approximately $78,000,000. There were no funded borrowings outstanding under the First Lien Revolving Credit Facility as of that date. As of the Petition Date, approximately $28,000,000 of letters of credit remained outstanding. As of March 31, 2006, $101,400,000 was outstanding under the Second Lien Credit Facility. As of May 31, 2006, the borrowings outstanding under the A/R Securitization were approximately $48,000,000, and no more borrowings are available. As of March 31, 2006, $134,300,000 of bond debt was outstanding. Cash Collateral The First Lien Credit Facility and the Second Lien Credit Facility are secured by substantially all of the assets of Werner Holding Co., (DE), Inc., and its subsidiaries, and is guaranteed by each of Werner DE's subsidiaries (except for Werner Funding Corporation) and Werner Holding Co., (PA), Inc. The liens securing the Second Lien Credit Facility are second in priority to the liens securing the First Lien Credit Facility. Borrowings under the A/R Securitization are secured by the assets of Werner Funding. The Industrial Building Revenue Bonds are secured by a standby letter of credit issued under the First Lien Credit Facility. The Notes are general unsecured obligations of Werner DE, ranking subordinate in right of payment to all existing and future senior indebtedness of Werner DE. The Notes rank pari passu in right of payment with all other indebtedness of Werner DE that is subordinated to the senior indebtedness of Werner DE. Larry V. Friend, vice president, chief financial officer and treasurer of Werner Holding Co. (DE), Inc., relates that the Debtors generate cash from the use of the collateral pledged under the First Lien Credit Facility and the Second Lien Credit Facility. "The Debtors use Cash Collateral in the normal course of their business in order to continue to finance their operations, make essential payments, such as employee payroll, taxes, and to purchase goods." As of the Petition Date, the Debtors have a cash balance of less than $3,000,000. Because the Debtors filed for bankruptcy, absent court authority pursuant to Section 363(c) of the Bankruptcy Code, the Debtors can't touch their lenders' cash collateral. Thus, the Debtors seek the Court's authority to use their lenders' Cash Collateral. Adequate Protection The Debtors propose to grant adequate protection to the Prepetition Secured Parties of their interests in the Prepetition Collateral. Specifically, the Debtors will grant their First Lien Lenders and Senior Prepetition Agent a valid, perfected replacement security interest in and lien on all Collateral, subject an subordinate only to: (i) permitted prepetition liens, (ii) postpetition liens granted to postpetition lenders, and (iii) carve-out for professional and U.S. Trustee fees. The Debtors will grant the same adequate protection to their Second Lien Lenders and Junior Prepetition Agent. The liens and security interest of the Second Lien Lenders are further subject to the Adequate Protection Liens granted to the First Lien Lenders and the Senior Prepetition Agent. The Adequate Protection Obligations will constitute superpriority claims. The Prepetition Lenders' claims will accrue and be allowed interest at the contractual rate. The Debtors will pay all reasonable fees and expenses required. Interim Approval At a hearing in Delaware yesterday, Judge Carey authorized the Debtors on an interim basis to use the Cash Collateral of (i) the Senior Prepetition Agent and the Senior Prepetition Lenders and (ii) to the extent that the value of the Prepetition Collateral exceeds the value of the Senior Prepetition Secured Obligations, the Junior Prepetition Agent and the Junior Prepetition Lenders, and the Prepetition Secured Lenders are directed to promptly turn over to the Debtors all Cash Collateral received or held by them; provided that the Prepetition Secured Lenders are granted adequate protection. The Court rules that the Prepetition Secured Lenders are entitled to adequate protection of their interest in the Prepetition Collateral, in an amount equal to the aggregate diminution in value of the Prepetition Secured Lenders' Prepetition Collateral. Judge Carey will convene the Final Cash Collateral Hearing on July 13, 2006, at 4:00 p.m. Objections must be filed and served no later than July 7, 2006. ----------------------------------------------------------------- [00008] DEBTORS' MOTION TO OBTAIN $99,000,000 OF DIP FINANCING ----------------------------------------------------------------- Without immediate access to cash, the Debtors won't be able to fund their operations and their reorganization efforts will fail even before it is able to get started. The Debtors seek to continue the operation of their businesses, to maintain business relationships with vendors, suppliers and customers, to make payroll, to make capital expenditures, and to satisfy other working capital and operational needs. Larry V. Friend, vice president, chief financial officer and treasurer of Werner Holding Co. (DE), Inc., tells the Court that the Debtors engaged in an extensive process prepetition to identify potential sources of postpetition financing. Based on discussions with 27 potential lenders, the Debtors have determined that postpetition financing on an unsecured basis or on a junior priority basis to the Prepetition Secured Parties would be unobtainable. DIP Facility According to Mr. Friend, the Debtors intend to finance ongoing operations of their business during their chapter 11 restructuring through a postpetition secured credit facility in the amount of up to $99,000,000 -- comprised of a $24,000,000 revolving credit line and a $75,000,000 term loan, which will be provided by a group of lenders led by Black Diamond Commercial Finance LLC, The CIT Group/Business Credit Group, and Morgan Stanley Senior Funding. The DIP Facility, Mr. Friend explains, will be used to re-purchase certain accounts receivable of Werner Co. that were sold and to provide liquidity for working capital and other general corporate purposes of the Debtors subject to a monthly budget. "The proposed DIP Facility will provide the Debtors with funds necessary for the operation of their business." Werner Holding Co. (DE), Inc. is the borrower under the DIP Facility. Its direct and indirect subsidiaries that are Debtors, and Werner Holding Co. (PA), Inc., are the guarantors. Black Diamond will act as the sole administrative, collateral, and documentation agent; sole bookrunner; and lead arranger. Morgan Stanley will act as syndication agent. The full amount of the DIP Term Facility must be drawn in a single drawing on the DIP Closing Date. Amounts borrowed under the DIP Term Facility that are repaid or prepaid may not be reborrowed. Loans under the DIP Revolving Facility will not be available at any time unless the aggregate balance of cash and cash equivalents of the Borrower and Guarantors at that time is less than $5,000,000. The interest rate is, at the borrower's option, Alternate Base Rate plus 300 basis points or Adjusted LIBOR plus 400 basis points. The default rate is the applicable interest rate plus 2% per annum. The Debtors' obligations under the DIP Facility will have priority over any and all administrative expenses, subject only to the carve-out for professional and U.S. Trustee fees, and will be secured by: -- perfected first priority security interests in and liens on all unencumbered property of the Debtors; -- perfected junior security interests in and liens on the Debtors' property that is subject to valid and perfected prepetition liens; and -- perfected first priority senior priming liens on all of the Debtors' property that is subject to existing liens that secure the Debtors' obligations unders the First Lien Credit Facility and the Second Lien Credit Facility and any liens granted postpetition to provide adequate protection in respect of the Prepetition Credit Facilities. According to Mr. Friend, the First Lien Lenders, the Second Lien Lenders and the Debtors are parties to an intercreditor agreement, dated May 10, 2005, which restricts the Second Lien Lenders' ability to contest the Debtors' request for authority to enter into the DIP Credit Agreement, and to seek adequate protection that is different than that provided to the Senior Prepetition Agent on behalf of the First Lien Lenders. The DIP Facility provides for a $2,000,000 carve-out for professional fees, and for payment of fees pursuant to Section 1930 of the Judiciary Code. The DIP Facility will mature at the earliest of: (1) December 12, 2007; (2) 45 days after the entry of the Interim Order, if a final order has not been entered; (3) the substantial consummation of a confirmed plan of reorganization; (4) termination of the Debtors' exclusive periods to file and solicit acceptances to a Chapter 11 plan; and (5) the acceleration of the loans and the termination of the Commitment in accordance with the final loan documentation. Mr. Friend relates that mandatory prepayments will be applied first to the DIP Term Facility, second to prepay the DIP Revolving Facility, and third to cash collateralize outstanding Letters of Credit. However, the first $5,000,000 of net cash proceeds from the sale of the building located at 10800-10900 West Belmont Avenue, Franklin Park, Illinois will not be used to prepay outstanding loans but will instead be deposited by Werner (DE) in a cash collateral account. The Cash Collateral Account and Funds will constitute collateral securing the Facilities. The Debtors are required to pay a number of fees -- letter of credit fees, commitment fees, arrangement fee, and facilities administration fees. The Debtors will pay up to $200,000 of Black Diamond's reasonable out-of-pocket expenses. The Debtors will indemnify their DIP Lenders and hold them harmless from and against all reasonable costs, expenses and liabilities arising out of or relating to any claim that relates to the DIP Financing, except for gross negligence and willful misconduct. Events of Default under the DIP Facility include: * nonpayment of principal, interest and other amounts; * violation of covenants; * erroneous representation and warranties; * cross default and cross acceleration; and * conversion of Debtors' cases to chapter 7 liquidation. Financial Covenants The Debtors agree to limit their Capital Expenditures to: For the Period CapEx Limit -------------- ----------- January 1, 2006 to December 31, 2006 $7,680,000 Calendar Year 2007 $9,840,000 The Debtors further covenant that they will not permit their Consolidated EBITDA -- earnings before income taxes, depreciation and amortization -- to be less than: Period Minimum Cumulative (From July 1, 2006 through) Adjusted EBITDA --------------------------- ------------------ July 31, 2006 ($2,205,000) August 31, 2006 ($1,257,000) September 30, 2006 ($1,218,000) October 31, 2006 $1,330,000 November 30, 2006 $3,614,000 December 31, 2006 $5,033,000 January 31, 2007 $4,076,000 February 28, 2007 $4,349,000 March 31, 2007 $5,741,000 April 30, 2007 $7,975,000 May 31, 2007 $10,372,000 June 30, 2007 $13,213,000 July 31, 2007 $15,556,000 August 31, 2007 $18,882,000 September 30, 2007 $21,795,000 October 31, 2007 $25,501,000 November 30, 2007 $28,269,000 December 31, 2007 $30,690,000 The Debtors promise they will not permit Operational Restructuring Charges to exceed: Maximum Cumulative Period Operational (From June 1, 2006 through) Restructuring Charges --------------------------- --------------------- June 30, 2006 $2,209,000 July 31, 2006 $4,177,000 August 31, 2006 $5,917,000 September 30, 2006 $8,383,000 October 31, 2006 $10,589,000 November 30, 2006 $12,628,000 December 31, 2006 $15,134,000 January 31, 2007 $16,653,000 February 28, 2007 $18,172,000 March 31, 2007 $19,726,000 April 30, 2007 $20,687,000 May 31, 2007 $21,679,000 June 30, 2007 $22,650,000 July 31, 2007 $23,466,000 August 31, 2007 $24,283,000 September 30, 2007 $25,065,000 October 31, 2007 $25,915,000 November 30, 2007 $26,714,000 December 31, 2007 $27,443,000 The Debtors promise not to permit their liquidity to be less than: Date Minimum Liquidity ---- ----------------- June 30, 2006 $29,123,000 July 31, 2006 $23,045,000 August 31, 2006 $25,126,000 September 30, 2006 $23,797,000 October 31, 2006 $21,032,000 November 30, 2006 $24,242,000 December 31, 2006 $30,045,000 January 31, 2007 $27,143,000 February 28, 2007 $17,921,000 March 31, 2007 $14,428,000 April 30, 2007 $10,000,000 May 31, 2007 $10,000,000 June 30, 2007 $10,000,000 July 31, 2007 $10,000,000 August 31, 2007 $10,579,000 September 30, 2007 $12,598,000 October 31, 2007 $18,607,000 November 30, 2007 $22,927,000 December 31, 2007 $27,511,000 A full-text copy of the DIP Credit Agreement is available for free at http://bankrupt.com/misc/werner_DIPfacility.pdf The Debtors contend that the DIP Documents have been negotiated in good faith. Hedging Arrangements The Debtors and their competitors routinely enter into hedging transactions with respect to aluminum prices when it makes good business sense to do so, Mr. Friend relates. Subject to the limitations contained in the DIP Agreement, the Debtors intent to continue their hedging practices postpetition and will utilize the DIP Facility to fund these transactions. Interim Approval At a hearing in Delaware yesterday, Judge Carey permitted the Debtors to borrow up to $75,000,000 pursuant to the DIP Facility on an interim basis. The Debtors are authorized to pay $1,125,000 of the remaining Arrangement Fee. The Court also approves the Debtors' execution of the DIP Documents. Judge Carey will convene the Final DIP Hearing on July 13, 2006, at 4:00 p.m. Objections must be filed by July 7, 2006, and served on: (a) Willkie Farr & Gallagher LLP Co-counsel for the Debtors 787 Seventh Avenue New York, New York 10019 Attn: Matthew A. Feldman, Esq. (b) Young Conaway Stargatt & Taylor LLP Co-counsel for the Debtors 1000 West Street, 17th Floor Wilmington, Delaware 19801 Attn: Robert S. Brady, Esq. (c) Skadden, Arps, Slate, Meagher & Flom LLP Counsel for the DIP Lenders 333 West Wacker Drive Chicago, Illinois 60606 Attn: Timothy R. Pohl, Esq. (d) Simpson Thacher & Bartlett LLP Counsel for the Prepetition Agent 425 Lexington Avenue New York, New York 10017-3954 Attn: Steven M. Fuhman, Esq. (e) Milbank, Tweed, Hadley & McCloy LLP Counsel for the Ad Hoc Committee of Second Lien Lenders 601 S. Figueroa Street, 30th Floor Los Angeles, California 90017-5735 Attn: Robert Jay Moore, Esq. (f) Office of the U.S. Trustee for the District of Delaware A full-text copy of the Interim DIP Order is available for free at http://bankrupt.com/misc/werner_interimDIPorder.pdf ----------------------------------------------------------------- [00009] DEBTORS' MOTION TO ENTER INTO RE-PURCHASE AGREEMENT ----------------------------------------------------------------- On May 10, 2005, Werner Co. entered into a Purchase and Sale Agreement with Werner Funding Corporation, Inc., a wholly owned special purpose subsidiary of Werner Co., under which Werner Co. agreed to sell to Werner Funding, on a continuous basis, accounts receivables in exchange for cash and interest bearing notes. Funding also entered into an Accounts Receivable Financing Facility with The CIT Group that provides a maximum $50,000,000 revolving line of credit based on a borrowing base calculation. The amount available under the A/R Securitization is determined weekly, and is based on 82% of Werner Funding's "eligible accounts receivable" reduced by certain amounts that primarily reflect the risk profile of Werner Co.'s customers. The A/R Securitization expires on the earlier of May 31, 2009, or upon termination of the First Lien Credit Facility. Borrowings under the A/R Securitization are secured by the assets of Werner Funding. As of May 31, 2006, the borrowings outstanding under the A/R Securitization were approximately $48,000,000 and no more borrowings are available. The Debtors sought and obtained the Court's authority to enter into a re-purchase agreement, which provides for them to re-purchase accounts receivable sold to Werner Funding pursuant to the Receivables Purchase Agreement. The Purchase Price fro the Receivables is expected to equal the outstanding amount of obligations owing by Werner Funding to CIT under the A/R Securitization as of the date of closing of the sale, plus a prepayment fee of 1% of outstanding obligations under the A/R Securitization. The Debtors anticipate utilizing up to $50,000,000 in proceeds from the DIP Facility to effectuate the re-purchase. Werner Funding will use the Re-Purchase Proceeds to satisfy all outstanding obligations owed to CIT under the A/R Securitization. Upon consummation of the re-purchase, CIT will release its lien on the Receivables. The Receivables will then become part of the collateral securing the interest of the DIP Lenders, as well as the First Lien Lenders and Second Lien Lenders. CIT will retain its lien on other assets in accordance with the payoff letter to be entered into by Werner Funding and CIT. Upon consummation of the Re-Purchase, Werner Funding will stop buying Werner Co. receivables. "The Re-Purchase should have no detrimental impact on Werner Funding's creditors as Werner Funding likely has no creditors other than the Debtors," Larry V. Friend, vice president, chief financial officer and treasurer of Werner Holding Co. (DE), Inc., says. The re-purchase is a condition to closing the DIP Credit Agreement. Judge Carey approves the Re-Purchase Agreement. A full-text copy of the Re-Purchase Agreement is available for free at: http://bankrupt.com/misc/werner_repurchasepact.pdf ----------------------------------------------------------------- [00010] WERNER CO. RECEIVES COURT APPROVAL OF FIRST DAY MOTIONS ----------------------------------------------------------------- GREENVILLE, Pennsylvania -- June 13, 2006 -- Werner Co. today reported that Judge Kevin J. Carey of the United States Bankruptcy Court for the District of Delaware has approved all of the "first-day motions" that Werner and several of its affiliated companies submitted as part of their filings for reorganization under Chapter 11 of the United States Bankruptcy Code. Approval of these motions will help Werner continue to operate in the normal course of business during the reorganization process. The Judge's orders include approval of Werner's request to continue payment of wages and benefits to employees and independent sales representatives, to fulfill customer orders and provide uninterrupted customer service, and to take other actions necessary to operate the Company with minimal disruption. Werner also received interim approval to access the $99 million debtor-in- possession (DIP) financing provided by Black Diamond Commercial Finance. This financing will provide Werner with additional liquidity and will be available to help satisfy obligations associated with conducting the Company's business, including payments to suppliers under normal terms for goods and services provided after the Chapter 11 filing. Werner will seek final authorization to utilize the DIP financing at a later court hearing. Steven P. Richman, Werner's President and Chief Executive Officer, said: "Judge Carey's approval of our first-day motions will ensure that Werner maintains normal operations throughout the reorganization process. There will be payment of employee wages and benefits without interruption, timely fulfillment of customer orders and efficient customer service, and payment to suppliers for goods and services provided after the filing. We look forward to using the Chapter 11 process to reduce our debt, and our annual interest payments on the debt, so that we have the financial flexibility necessary to invest in Werner's future." More information about Werner's reorganization is available on the Company's Web site at http://www.wernerladder.com/ ----------------------------------------------------------------- [00011] U.S. TRUSTEE SETS ORGANIZATIONAL MEETING FOR JUNE 22 ----------------------------------------------------------------- The United States Trustee for Region 3 will convene an organizational meeting in Werner's chapter 11 cases at 1:00 p.m. on Thursday, June 22, 2006. The meeting will be held in the Hagley Room at the Doubletree Hotel, located at 700 King Street in Wilmington, Del. The sole purpose of the meeting will be to form a committee or committees of unsecured creditors in the Debtors' bankruptcy cases. This is not the meeting of creditors pursuant to Section 341 of the Bankruptcy Code. However, a Debtor's representative will attend and provide background information regarding the cases. *** End of Issue No. 1 ***