American Plumbing & Mechanical, Inc.

American Plumbing & Mechanical, Inc. ("AMPAM") is one of the nation’s largest providers of residential plumbing and heating, ventilation and air conditioning (HVAC) contracting services. AMPAM had LTM revenues of approximately $500 million and debt outstanding in excess of $190 million

The company was forced to file for Chapter 11 protection in October 2003 due to:

  • Financial stress, making it challenging for the company to comply with covenants.
  • Excessive debt load with a $5.5 million interest payment due on the Senior Subordinated Notes on October 15, 2003.
  • Restricted liquidity resulting from increased bonding requirements and the cost of such requirements.
  • Significant losses in AMPAM’s commercial operations.

CDG was retained as financial advisor to the company in July 2003

ISSUES

  • Liquidity issues due to additional bonding requirements, higher insurance costs and losses at commercial operations.
  • DIP financing was needed to support customer and vendor confidence.
  • Non-core operations needed to be divested in an expedited manner.
  • Corporate overhead and staff reduction was necessary.
  • A core business plan had to be quickly defined and expedited a core business plan.
  • Operations needed to be stabilized in order to maintain Company value

VALUE TO CLIENT

  • Assisted the Company with the cash management forecasting process to ensure borrowing capacity under the DIP financing facility and stabilized operations.
  • Facilitated the divestiture of all commercial operations and several non-core businesses.
  • Led all the negotiations with various creditor constituents to reach a consensual Plan of Reorganization.
  • CDG formulated and implemented a strategy that resulted in a reorganization plan with exit financing and debt conversion, while maintaining the majority of ownership in the hands of old equity:
    • Term Lenders with $83.9 million of exposure were paid down $23.4 million with asset sales, agreed to a $7.2 million principal reduction, and reinstated the remaining balance.
    • Bonds with $95 million of exposure were converted into 49% of the new equity.
    • Existing owners received 51% of restructured company’s equity.