O'Sullivan Industries buys time with agreement

The bill collectors are still pounding on the doors but O'Sullivan Industries officials have managed to get them to agree to hold off while they restructure their business.
In a news release issued today and filed with the federal Securities and Exchange Commission, O'Sullivan's million-dollar CEO Bob Parker says the company has entered into a forebearance agreement with the controlling holders of its 10.63 percent senior secured notes due 2008.
As you recall, O'Sullivan announced last month it was not going to be able to make the payment on the debt. The new agreement will give the company until Sept. 15 to get its act together, though extensions may be granted with the approval of both sides.
"We will continue to negotiate the terms of a financial restructuring with our noteholders and others during the time afforded us by the forbearance agreement, and we expect to maintain normal operations throughout the financial restructuring process," Parker said. "We will continue to provide our customers with the same high-quality products and superior customer service without any interruption, and will continue to act responsibly toward our employees and vendors."
Parker did not mention whether he considered the firing of long-time faithful employees and the recent layoff of 144 workers to be acting responsibly.
If O'Sullivan Industries fails to pay the interest on its notes within this grace period, it will constitute a default under its credit agreement of 2003, according to the news release.
O'Sullivan officials are working to amend the credit agreement, the news release said.
The company has hired Lazard Freres & Co LLC, an international firm with extensive experience in restructuring troubled companies to serve as its financial advisor and Dechert LLP to serve as its legal advisor.
It should be interesting to read O'Sullivan Industries' next quarterly report to see if this constitutes the usual "everything is going according to plan."