Letters to Champion Employees
November 17, 2009
Dear Champion Employee:
I am pleased to report our first day hearings went very well today. The court gave us approval to pay pre-petition employee wages and salaries. This means that any old paychecks you haven’t cashed yet will be honored by your banks. And of course any paychecks issued after November 15, 2009 will be paid.
We also received court approval to use up to approximately $31 million of our $40 million debtor-in-possession (DIP) facility on an interim basis pursuant to the terms of the facility. This interim financing gives the Company the liquidity and resources to keep goods flowing in and out of our plants. The final hearing on use of the entire DIP facility is scheduled for Thursday, December 10, 2009.
Having received approval of our first-day motions so quickly, puts Champion on strong footing as we move towards recapitalizing and facilitating a sale of the Company.
For your information, a copy of our public announcement is enclosed. I want to remind you that the Information Line remains in operation at (877) 857-7554 or (248) 614-8390 if you are calling from outside the United States. Please feel free to call with any questions you may have. You can also visit our website at www.championrestructures.com.
Sincerely,
William C. Griffiths
Chairman, President and Chief Executive Officer
Champion Enterprises, Inc.
November 15, 2009
Dear Champion Employee:
I want to inform you about an important action we have taken to enhance and preserve our Company’s future.
Today, Champion Enterprises, Inc. and its domestic operating subsidiaries voluntarily filed to reorganize under Chapter 11 of the U.S Bankruptcy Code.
After operating for many years with an increasingly burdensome debt load, the Company determined that the Chapter 11 process provides Champion with the most timely and orderly means to restructure its debt obligations and facilitate a recapitalization so that the Company can be best positioned to take advantage of opportunities as they arise in the future. The Company expects this restructuring will be accomplished through a court-supervised sale of its operations.
As we move through the process, there are several important facts you should know and understand about Chapter 11.
- Champion Enterprises is not going out of business. The U.S. filing is a financial restructuring, not liquidation.
- The Chapter 11 filing only applies to our operations in the United States. Our operating subsidiaries in the United Kingdom and Canada are not included in the filing and will continue to manage their operations without supervision of the U.S. courts. While not included in the Chapter 11 filing, the international operations will be included as part of a sale.
- In the U.S., as is common practice in a Chapter 11 filing, we have asked the Court for authorization to pay wages, salaries, and benefits of its employees and certain independent contractors in the ordinary course. We expect the Court to grant our request at a hearing this week. Outside of the U.S., normal payments of wages and benefits will also continue.
- Our plants, offices and other facilities will continue to operate.
- All of our global customers can be assured that we will continue to meet their design, production and delivery needs in a timely manner.
- Our customers should expect to see the same superior design, quality production and outstanding customer service for which Champion is known.
- Our executive team and I will continue to manage all of our operations in the U.S. and abroad.
I want to assure you that we have adequate cash to continue to pay for goods and services we need to operate and serve our customers. Champion has obtained a $40 million loan from certain of its current lenders. This new financing, known as debtor-in-possession or DIP financing, is only available to companies operating under Chapter 11 protection. This new financing, which is subject to court approval, will be available as needed to ensure that we remain able to fund operating expenses, including supplier obligations and employee wages, salaries and benefits, while we work through this reorganization.
Our balance sheet is the problem, not our operations. We believe that through this process we will be able to strengthen our capital structure and position our company to capitalize on the anticipated recovery in the residential and commercial construction markets.
This is a transitional time and I know it is challenging for all of us. Each of you is vital to a successful reorganization and the future of the Company. It’s more important than ever that we remain focused in every part of the world on doing our jobs and strengthening our business through new sales, on-time production and delivery, high quality and outstanding customer service.
I encourage you to read the materials we have prepared for you and share them with your family. We will keep you informed as the restructuring progresses. In addition the Company has established a restructuring information line to answer any questions about the process. The number is (877) 857-7554, or outside of the United States call (248) 614-8390. You can also visit our website at www.championrestructures.com.
Let me close by thanking you in advance for your hard work and dedication as we work our way through this unusual period.
Sincerely,
William C. Griffiths
Chairman, President and Chief Executive Officer
Champion Enterprises, Inc.