U.S. Concrete, a concrete supplier for the construction industry, filed Chapter 11 bankruptcy with assets of $389.2 million and debt of $399.4 million as of Dec. 31, 2009. They hope that the pre-bankruptcy plan’s approval will allow them to reduce their debt by approximately $272 million. The company said it has reached an agreement with a “substantial majority” of its bondholders on the bankruptcy reorganization plan.
The restructuring proposal would swap the company’s 8.325 percent notes for the reorganized company’s equity, according to the statement. Current shareholders would get warrants to buy up to 15 percent of the new company’s stock.
The company said the bankruptcy won’t affect operations or suppliers and expects the restructuring to take between 75 and 90 days, according to court documents. U.S. Concrete will seek court approval of an $80 million loan from JPMorgan Chase & Co., as the agent for lenders, to help fund operations while in bankruptcy.
This company’s bankruptcy filing is most likely a result of the trickle down effects of a depressed housing market and foreclosure crisis. The construction industry has experienced a reduced number of new projects and investors and lenders have become wary of the real estate industry as profits drastically reduce. But it’s not just the suppliers of the construction industry who are seeking bankruptcy because they can no longer sustain their operations; many individuals dependent on the jobs provided by this industry are also filing bankruptcy. With the increased number of job losses in the real estate sector and the small number of new jobs being created, many workers are remaining unemployed for longer periods of time and seeking bankruptcy protection so they can protect their few remaining assets from creditors.