Standard Register Co (OTCMKTS:SRCT) filed for ‘Chapter 11’ bankruptcy on Thursday and the marketing and printing firm said it intends to sell its business operations to Silver Point Capital in a deal valued at $275 million. The deal will be dependent on the higher offers that will be given at a court-supervised auction.
The bankruptcy process will reduce its shaky obligations and place the business operations on a long-term growth path. However, due to the bankruptcy SRTC stock will likely be worthless. The company’s shares trade over the counter.
The share price of Standard Register plunged more than 70% on Thursday’s trading session to close $0.120 each, with trading volume of 1.02 million. The proceeds of Standard Register’s sale will be used to repay creditors. The company has almost $316 million of secured debt, as per the documents filed with the Bankruptcy Court in Delaware.
Moreover, Standard Register owes nearly $72 million to suppliers and about $193.6 million to underfunded pensions. The company stated that it would take a loan of up to $155 million to continue its operations while in bankruptcy.
The other details
Standard Register Co (OTCMKTS:SRCT) said in court filings that the problem came due to declining demand for printed training materials. Also, the cost of the servicing pension and debt obligations resulted in further problems. The company was offered two bids for its operations prior to its filing of the bankruptcy. It later chose an associate of Silver Point as the starting bidder at the auction. However, Standard didn’t identify the other companies that would take part in bidding process.
Silver Point is one the lenders to Standard Register. The bankruptcy filing and then sale would act as a support for its long-term viability. The bankruptcy filing doesn’t mean that it is the end of a company. There are several companies that emerged strongly after filing.