Tampa HQ Masonite readies for Chapter 11
Wake up and good morning. Masonite International, a Canadian door maker with its corporate offices at One North Dale Mabry, at the intersection of Dale Mabry and W. Kennedy Blvd. in Tampa, plans to file for a prearranged Chapter 11 bankruptcy protection later this spring as part of a strategy to rid itself of $2 billion in debt, leaving just $300 million to handle. Masonite makes all kinds of doors, like this "Barrington Mahogany" door that is, in fact, made of fiberglass.
Masonite issued a press release late Monday explaining its restructuring, although you have to read all the way to the 5th paragraph before the phrase "Chapter 11" is mentioned. The company has been controlled by the giant private equity firm KKR (Kohlberg Kravis Roberts & Co.). But under the Chapter 11 plan, most of KKR-owned firm will be given over to lenders. According to the Wall Street Journal (subscription required), a lending group led by Centerbridge Partners and Oaktree Capital will own about 97.5 percent of the company, with bondholders holding the rest.
The bankruptcy is a blow to private-equity giant KKR, which bought the company in 2005 and took it private for more than $2.7 billion. At the time, KKR thought it was making a safe investment on the reliable -- my, how times have changed! -- home-building market. Now its entire ownership stake is being wiped out, according to the Journal.
Masonite began struggling shortly after the KKR deal was completed, losing money from 2005 on amid rising material prices and slowing sales. It was hit hard in 2007 when Home Depot, then its largest customer, shifted most of its business to another door maker.
Hammered by the continuing downturn in the housing industry, Masonite has twice before breached financial covenants, first in June and again in September of last year. KKR wrote down its investment in Masonite to zero that same month.
Masonite is based in Mississaugua, Ontario, but operates its international headquarters in Tampa. It is one of the world's largest makers of interior and exterior doors, selling about 45 million doors in 2007. The company employs about 9,000 people, including 2,400 union members, according to an April 2008 SEC filing. The company does not plan to close any of its plants or sites as part of this filing.
However, in December the Orlando Sentinel reported that Florida Made Door, a Masonite subsidiary and Lake County's fourth-largest manufacturer operating in the small Florida town of Astatula (northwest of Orlando), was laying off large portions of its 150-employee facility. The business had been a staple of the town's economy since it moved there from Orange County in the 1970s.
The black and white photo shows company founder William H. Mason (with shovel at the 1933 World's Fair). The researcher, engineer and inventor discovered in 1924 how to change the way wood was used to form more effective building materials. This paved the way for a succession of new building products for the home. (Photo courtesy of Masonite.) The product Masonite is formed using wooden chips, blasting them into long fibers with steam and then forming them into boards. The boards are then pressed and heated to form the finished boards.
-- Robert Trigaux, Times Business Columnist