Vitro America's Case "Unlike Any Other
Bankruptcy in Our Industry," Says Arturo Carrillo; Carrillo
Talks to glassBYTEs.com About Upcoming Asset Sale
April 6, 2011
Arturo Carrillo, president and chief executive officer of Vitro
America, wants to send a message to the company's suppliers: "We're
very humbled. We never really thought we would be here and that
this situation would arise," he told glassBYTEs.com this
afternoon in discussing this
morning's announcement that the Memphis, Tenn.-based company,
and all its U.S. operations including Binswanger Glass, had entered
into an asset purchase agreement with a private equity firm.
"They [suppliers] out of all people will have a little more
stress about this. But this has been unlike any other bankruptcy
that has happened in our industry," Carrillo pointed out. "This
is not because of our bank; we have significantly more assets than
I can't guarantee [suppliers will] be fine but there's
a high expectation that they would. Any of the suppliers who have
visited our plant have seen the amount of equipment there; we own
all our significant real estate; we have very high levels of inventory;
and we are way beyond our debt base - our debt is pretty low. This
is a different type of issue. We didn't get here because the suppliers
or banks came after us," Carrillo said.
Rather, the U.S. subsidiary of glass manufacturer Vitro SAB had
arrived at this point after four Vitro SAB creditors, unhappy with
a debt settlement offer, had filed a petition for involuntary
bankruptcy in November 2010 against 15 of Vitro's U.S. subsidiaries.
Last week, a federal bankruptcy judge had
ruled that he would decide at a later, unknown date whether
subsidiaries of Mexico-based glass manufacturer Vitro SAB would
be placed into involuntary Chapter 11 bankruptcy.
According to Carrillo, Vitro America had been preparing a "contingency
plan" for some time, should the bankruptcy ruling have been
enforced. He noted that Vitro SAB was "fully onboard"
with the decision. Following last week's trial, Carrillo said it
became clear that an asset sale was the best option for the U.S.
"We were at the trial. We saw how it went and that, and further
knowledge of what would happen after the trial even if it won -
basically, further litigation - and we realized that we just needed
to get out from underneath this. [There was] no way forward without
removing ourselves from underneath this litigation," Carrillo
Grey Mountain Partners LLC, the equity firm in question, has been
in tentative discussions with Vitro America for about a month.
"Grey Mountain Partners has clearly been interested in the
industry," Carillo said. (Grey Mountain was the stalking
horse bidder of flat glass fabricator Arch Aluminum & Glass'
assets in January 2010.) "They've been actually calling different
people in the industry and at one point they called us. We decided
a little more than a month ago that prudent contingency planning
was something we should do. We reached out to our bank to talk about
financing and we reached out to Grey Mountain Partner to say, 'look,
we'd like to have a contingency plan.' And they said 'sure, we'd
love to do that, we've been interested in this industry.'"
Carillo added, "Frankly, the litigation with our parent company
has been very public, and whoever was interested would have called
Carrillo expects the interest from the firm comes from a realization
"that the glass industry has gone through the worst of it,
and that they are at the bottom of a cycle and that if they get
to come in right now they will capture the up side of the industry."
(A Grey Mountain Partners representative had not responded to glassBYTEs.com's
request for comment as of press time.)
Carrillo said he has been encouraged by conversations with the
firm thus far. "We had had conversations with their thoughts
on this industry and their thoughts on this company and frankly
they think we have a good platform, they clearly see some value
in the people and the management and the asset base," he said.
Due to the public nature of the litigation, Carrillo said, talks
with employees have been ongoing as well. "Certainly, we've
been talking to employees. This bondholder litigation has been very
public. We've been telling them for some time the possibilities,"
he said. "Last week, we went in and clearly explained what
our contingency plans were, which is the financing, the potential
sale of the company. When we came to the realization that these
were no longer just going to be contingency plans, this is what
we needed to do, we began communicating with our suppliers and employees
immediately. From personal calls to conference calls, emails, we
tried as always to be very straightforward with everyone in telling
them what's going on."
No immediate changes are expected, and Carrillo maintains that
it will be business as usual for customers.
"From a customer's perspective, they shouldn't be affected,"
he said. "Our employees should be delivering their glass, producing
the glass, fabricating the glass today. Our employees should be
installing glass, installing windshields, going to jobsites as they
Despite all his confidence in going forward, and all the planning
that has come before, Carrillo noted that the upcoming asset sale
has been difficult to process.
"I've got to say, it was always a contingency plan, and it
was always easier to talk about contingency planning - but we never
really thought this would happen, to be honest. We've been acquiring
companies, we've been investing and we've been launching new product
lines. We got caught in the crossfire. This has never been about
us, it's always been a Vitro SAB bondholder issue that, unfortunately,
we got dragged into," Carrillo said.
He added, "This is going to be somewhat difficult for [suppliers]
and I'm sorry for putting them through the stress. We never really
wanted to be here, and we're sorry. But we'll try to work with them
and we're open to them, to have conversations. This is not a process
to clean our balance sheet."
The sale is expected to conclude within 60 to 90 days. Stay tuned
to glassBYTEs.com for further details as they emerge.
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