Maytag gets credit line to pay for restructuring

Maytag gets credit line to pay for restructuring
Date November 10, 2005
Section(s) Local News


Maytag Corp., said today that it has received its new $600 million revolving credit line that will enable it to move forward with its manufacturing restructuring plans, including the possible closure of its Newton plant.

The five-year credit agreement replaces the existing $300 million revolving credit instrument.

“This agreement is a positive development for Maytag,” said George Moore, executive vice president and CFO. “The new credit agreement should provide us with substantially more financial flexibility, including capacity to meet all 2006 debt maturities, as well as the ability to operate and restructure our business.”

Borrowings under the agreement, which was not drawn down at closing other than to support outstanding letters of credit, are secured by accounts receivable and inventory of Maytag and certain Maytag subsidiaries. Under the terms of the agreement, Maytag also has the ability to increase the new facility by $150 million to $750 million.

Maytag announced plans to secure the new credit line in announcing its $18.2 million third quarter loss last month. The company said it needed to shed excess manufacturing capacity in its laundry and floor care operations in order to improve financial performance.

On Monday, Maytag announced plans to close its Florence, S.C., laundry plant. The shutdown is expected to be completed early next year. The plant, which produces top-load Neptune washers, employs 60 people, down significantly from employment levels at the plant when it was acquired as part of the Amana purchase.

In addition to its Newton and Florence laundry operations, Maytag has said that costs at its floor care plant in North Canton, Ohio, could be targeted for closure. Closing all three plants would save the company $140 million annually, Maytag estimates, not including the restructuring charges it would incur.

In announcing Maytag‘s intention to secure the new credit line last month, Maytag CEO Ralph Hake said it would allow Maytag to have the “required financing flexibility to achieve the required manufacturing restructuring.”

Maytag has agreed to the $2.7 billion Whirlpool buyout in August after a long bidding war. The U.S. Justice Department is reviewing the merger with company officials hoping it can be completed early next year.

The new credit facility was co-arranged by J.P. Morgan Securities, Inc. and Citigroup Global Markets, Inc.


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