Pace Industries in Harrison
Pace Industries LLC of Fayetteville, which handles aluminum, zinc and magnesium die casting, is filing Chapter 11 bankruptcy, the company announced early Monday.
In a statement, the firm said the move will “give the Company the financial foundation necessary to resume normal-course operations following the COVID-19 outbreak.”
“Over the past two years, we launched significant new programs for the automotive industry to further penetrate this important growth market and implemented a series of cost-saving initiatives to position our business for long-term success,” CEO Scott Bull said. “Unfortunately, we were not able to realize the full benefits of these new programs and initiatives before the coronavirus weakened demand, disrupted our supply chain and forced us to temporarily close many of our plants in the United States.”
In March, the company idled operations in Harrison and Fayetteville, putting nearly 600 workers on the sidelines, as the economic effects of the COVID-19 outbreak began to weigh on operations. Last week, the company said it was temporarily shutting its Muskegon, Michigan, plant for about 6 months and laying off about 450 people, according to Bloomberg Law.
The company offers end-to-end, nonferrous die cast supply chain solutions and an array of services, including advanced engineering, tool and die fabrication, prototyping, precision machining, assembly, finishing and painting. Its clients include those in the automotive, medical, electrical and lawn and garden industries.
“We are confident in our go-forward direction and the underlying strength of our business and are taking these actions now to ensure we are positioned to realize our full potential when we — and our customers — are able to resume normal-course operations,” Bull said.
The company estimates liabilities of between $100 million and $150 million. It said its senior secured noteholders, along with its existing revolving credit lenders, will provide commitments for up to $175 million in debtor-in-possession financing to help the company meet its commitments during the bankruptcy process.
Under the terms of its proposed plan, the company would convert its existing senior secured notes into 100% of the equity in the reorganized company. Pace said it expects to complete the process in the second quarter.
The company said it filed motions with the bankruptcy court that would allow it to maintain employee wage and benefit programs, honor customer warranties and continue to pay suppliers.
The company was founded in 1970 in Harrison and now has operations in eight states. It said its operations in Mexico were unaffected by the bankruptcy filing.
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