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Masonite struggles to avoid bankruptcy

Masonite International Corp., the Canadian doormaker that runs its international headquarters out of Tampa, is in a tough fight to stay out of bankruptcy.

Masonite has violated loan covenants and has until Nov. 13 to come to new financial terms with lenders. That coincides with the end of a 30-day grace period on a recent bond default.

Masonite spokesman Michael Freitag said the company plans to stay in business regardless of the outcome of negotiations. "Fortunately, the actions we have already taken to reduce costs and strengthen our operations have positioned us well to weather the current economic environment," he said in a statement.

A week ago, Masonite missed a $42-million interest payment of subordinated notes that were due. Earlier, the doormaker breached loan covenants that dealt with how much debt it could carry in its second quarter.

S&P and Moody's have both lowered their corporate ratings on Masonite, which is owned by corporate buyout titan Kohlberg, Kravis, Roberts & Co.

Trade reports suggest KKR is in a tricky negotiating status. As an owner it wouldn't want to squeeze the firm too hard for payments. But an arm of KKR also reportedly holds 5 percent of Masonite's debt, and fellow creditors could pressure the company to go into bankruptcy.

KKR bought Masonite for $1.9-billion in 2004, before a severe real estate downturn rippled through the home furnishing and home repair industry. The company has shrunk from a high of 15,000 employees worldwide in 2006 to about 9,700 now.

Between 90 and 95 of those workers are in the Tampa international headquarters, which oversees operations in Europe, the Middle East and a joint venture in Africa. Another 30 work in a facility north of Tampa International Airport assembling door displays for customer showrooms and retailers like Home Depot and Lowe's.

Jeff Harrington can be reached at harrington@sptimes.com or (727) 893-8242.

Masonite struggles to avoid bankruptcy 10/24/08 [Last modified: Wednesday, October 29, 2008 9:50pm]
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