Pace Industries files for bankruptcy

Pace Industries LLC, headquartered in Fayetteville, Arkansas, says the company and its U.S. subsidiaries have initiated a voluntary prepackaged Chapter 11 process in the U.S. Bankruptcy Court for the District of Delaware. The process is part of an agreement Pace reached with its senior secured lenders on the terms of a comprehensive financial restructuring plan to deleverage its balance sheet. Pace says the holders of its senior secured notes as well as its revolving credit facility lenders support the agreement.

Pace is a full-service aluminum, zinc and magnesium die casting company that offers end-to-end nonferrous die cast supply chain solutions and a wide array of capabilities and services, including advanced engineering, tool and die fabrication, prototyping, precision machining, assembly, finishing and painting. Pace has 12 divisions, 21 manufacturing facilities and more than 4,000 associates across the U.S. and Mexico.

The company’s operations in Mexico are unaffected by the filings, though they will benefit long-term from the actions Pace is taking to strengthen its financial position, Pace says.

The company idled operations in Fayetteville and Harrison, Arkansas, in March because of the coronavirus, putting nearly 600 workers on the sidelines, according to press reports. Pace also announced in early April that it was temporarily shutting down another plant in Michigan and laying off nearly 450 employees.

Upon implementation, the restructuring agreement will give Pace the financial foundation necessary to resume normal operations following the COVID-19 outbreak, realize the full benefit of its cost-savings initiatives and strategic investments recently executed and continue to serve its customers as a fully integrated provider of die cast aluminum, magnesium and zinc components, according to the company.

Pace says its senior secured noteholders, along with its existing revolving credit lenders, will provide commitments for up to $175 million in debtor-in-possession financing to help ensure Pace can meet its commitments during the process. Under the terms of the proposed prepackaged plan, the company will convert its existing senior secured notes into 100 percent of the equity in the reorganized company. As a result of its noteholder and lender support, Pace says it expects to complete the process in the second quarter of 2020, emerging as a financially stronger company that is well-positioned to succeed in the post-COVID-19 environment.

“Over the past two years, we launched significant new programs for the automotive industry to further penetrate this important growth market and implemented a series of cost-saving initiatives to position our business for long-term success,” says CEO Scott Bull. “Unfortunately, we were not able to realize the full benefits of these new programs and initiatives before the coronavirus weakened demand, disrupted our supply chain and forced us to temporarily close many of our plants in the United States.”

He adds, “We are confident in our go-forward direction and the underlying strength of our business and are taking these actions now to ensure we are positioned to realize our full potential when we—and our customers—are able to resume normal-course operations.”

The company says it has filed customary motions that will allow it to maintain employee wage and benefit programs, honor customer warranties as usual and continue to pay suppliers. Although the motions remain subject to court approval, Pace says it expects all trade creditors, employees, sales agents and unsecured creditors to be paid in full and on time in the normal course of business.

Further information about the case can be found at www.kccllc.net/pace.