For those unfamiliar with the current affairs of Republic Windows & Doors here is a short summary:
The manufacturing company produced doors and windows primarily for the residential construction industry. Due to the severe decline in the construction industry, sales at the company dropped dramatically. Bank of America cancelled its line of credit due to the downturn at the plant.
At the high point of the residential construction market, product sales to home builders totaled $30 million at the company. This year, those sales will total $6 million, said Amy Zimmerman, vice president of sales and marketing. Sales of replacement windows will total $38 million this year, down from $40 million.
"Banks are in the business to make money and at some point they have to make a business decision and that's what this is," Zimmerman said.
http://www.chicagotribune.com/...
Workers were given 3 days notice of the plant's closing. The workers organized a sit-in demanding their severance and vacation pay. Illinois Gov. Rod Blagojevich issued a statement stating that the State of Illinois will discontinue business with Bank of America if it did not restore its line of credit.
http://www.reuters.com/...
The management of Republic Windows & Doors today announced the following chronology of the company's discussions with its lender Bank of America."
10/16/08 a- Republic presents plan for "orderly" wind down including ceasing manufacturing in January 2009.
INFORMS BANK OF AMERICA OF POSSIBLE
WARN ACT NOTICE ISSUES AND VACATION PAY.
10/15/08 a- Informed Bank of America that Republic had a 10/24/08R buyer for the existing Note for ±$3.0M, discount of $1.5M.
10/15/08 a- Offer rejected by Bank of America stating they believed they were "over" collateralized.
10/15/08 a- Bank of America demands plans for "orderly" wind down Republic.
10/18/08 a- Bank of America rejects plan and demands a shorter wind down
period.
10/27/08 a- Republic responds with a new plan to cease operations January 2009.
10/29/08 a- Bank of America rejects plan.
11/25/08 a- Republic requests permission from Bank of America to issue
vacation pay to all employees.
11/26/08 a- Bank rejects Company request to make vacation pay.
Conditions Precedent to "Current"
02/2007 -
07/2008 a- Republic obtains equity infusion from a capital fund which over time ultimately grows to ±$11,000,000. This capital is used to
retire existing secured debt of ±$8,000,000 and other senior lenders
as well as finance ongoing operations and cash "burn".
http://www.marketwatch.com/...
Bank of America, which is participating in the bailout program, issued a response basically reinterating that it's nothing personal, just a business decision.
As a creditor of the company, we continue to honor all of our agreements with the company and have provided the maximum amount of funding we can under the terms of our agreement.
By any objective measure, Republic Windows and Doors is unable to operate profitably given the challenges of the current economic climate and its industry. Public statements by management of the company have made this clear.
When a company faces such a dire situation, its lender is not empowered to direct the company's management how to manage its affairs and what obligations should be paid. Such decisions belong to the management and owners of the company.
Bank of America has worked with the company and shared our concerns about the company's situation and its operations for the past several months. It is unfortunate that the company has been unable to reverse its declining circumstances.
P.S. Have a Happy Holiday, Love Bank of America
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