Chemicals firm Venator has filed for Chapter 11 bankruptcy protection in the US after reaching agreements with what it says is an "overwhelming majority" of its lenders and noteholders.
The Teesside-based maker of pigments, which are used in everything from clothing to cars, announced the move saying it wanted to place itself on a better footing for future growth. It follows a period of huge losses for the firm and several weeks after the completion of a £111m deal to dispose of its iron oxide business to Hong Kong giant Cathay Industries.
Venator said it had developed a recapitalisation plan in which nearly all of its funded debt will be equitised, and $275m (£221.9m) in new financing secured from supporting creditors. The Chapter 11 process, part of the US Bankruptcy Code, allows companies to reorganise their debts and assets in a proposed plan that must be in the best interests of creditors.
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The $2.1bn revenue firm said it would be delisted by the New York Stock Exchange but that it expected to continue operating as normal throughout the court-controlled process and would continue paying wages and benefits to its global workforce, which includes 600 people in the North East. The process is expected to take two months.
Simon Turner, president and chief executive officer of Venator, said: "The agreement we have reached with our lenders on a recapitalisation plan will significantly reduce Venator's debt burden and place the company on a sound financial footing, which will enable us to deliver on our strategy and capitalise on future growth opportunities. We have faced unprecedented economic headwinds, including significantly lower product demand and higher raw material and energy costs in the second half of 2022, but Venator's management, alongside our advisors, has worked tirelessly to assess all viable options available to us to ensure the long-term sustainable success of the company."
The latest development comes amid a turbulent time for Venator which earlier this year posted net losses of $188m (£151.7) for 2022, at which point it said an in-depth strategic review was looking at actions to bolster liquidity and establish a capital structure. In January, one of the firm's major shareholders published a searing open letter to Venator management in which it raised concerns about "alarming long-term underperformance".
Prague-based investor J&T MS 1 SICAV blamed Venator's board for a steep decline in the firm's share price since it floated on the New York Stock Exchange in summer 2017. In its defence, Venator said it had faced a number of headwinds include cost inflation and wider economic uncertainty and pointed to a number of actions it has taken in response, including a £41m ($50m) cost reduction plan.
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