Originally published in ABL Advisor on 8/4/15.
Coyne Seeks Relief Under Chapter 11, NXT Capital to Provide $3.5MM DIP
Coyne International Enterprises Corp., a leading U.S. commercial laundry service company (Coyne), filed for relief under chapter 11 of the Bankruptcy Code Friday in the United States Bankruptcy Court for the Northern District of New York in Syracuse. The filing was made to permit Coyne to restructure its balance sheet and complete three planned sales of its operating units.
Pending the completion of the sales, Coyne will continue to operate under the supervision of the Bankruptcy Court. Coyne’s current management team will continue to lead the company throughout this process. Coyne will continue to provide the same high-quality service that its customers rely on, and Coyne does not expect any service interruptions.
“The filing was necessary to preserve the value of Coyne’s business and allow us to complete our asset sales,” explained Mark Samson, Coyne’s CEO. “All our efforts are focused on concluding this process in an efficient and successful manner. Coyne intends to work with all of our stakeholders to maximize the value of our assets.”
Coyne employs approximately 620 people at its nine locations. Under the three proposed sales, seven of Coyne’s nine locations will remain open and approximately 525 jobs will be preserved.
The three planned sales are: New Bedford, Massachusetts, which will be sold to Clean Uniforms and More!, Richmond, Virginia and Greenville, South Carolina, which will be sold to Prudential Overall Supply, and the remaining plants and service centers, Bristol, Tennessee, Buffalo, New York, Cleveland, Ohio, London, Kentucky, Syracuse, New York, and York, Pennsylvania, which will be acquired by Coyne’s existing senior management team.
Coyne will ask the Bankruptcy Court to set rules for determining whether there are any higher and better offers for the three asset sales. If new bidders make qualified offers these assets, Coyne will hold an auction for the three groups of assets under rules approved by the Bankruptcy Court. If no other bidders emerge, Coyne will ask the Bankruptcy Court to approve the sales. Because Coyne marketed these assets for approximately a year prior to the chapter 11 filing to prospective industry and financial buyers, Coyne has asked the Bankruptcy Court to fast-track approval of the sales, and Coyne hopes to close the sales within 90 days of the filing.
To finance its operations in chapter 11, Coyne has obtained a commitment for $3.5 million in debtor-inpossession financing from NXT Capital, LLC, a financial institution based in Chicago. NXT is also the agent for Coyne’s senior secured debt. “We view NXT’s willingness to make a DIP loan as an important vote of confidence from our senior lender and we look forward to working with NXT to complete this restructuring,” Samson said.
For fiscal year 2014 (which ends on October 31) and fiscal year 2013, Coyne had revenues of $66.2 million and $77.4 million. Coyne owed NXT, its senior secured lender, approximately $34 million as of the commencement of the chapter 11 case. It also owed Medley Opportunity Fund II, L.P., its junior secured lender, approximately $20 million as of the commencement of the case.
Headquartered in Syracuse, Coyne was founded in 1929 by J. Stanley Coyne and grew into one of the largest privately owned industrial laundry companies in the United States.
Coyne’s lead bankruptcy counsel are Robert Rattet, Stephen Selbst and Hanh Huynh of Herrick, Feinstein LLP of New York City; its local counsel is William Brown of Phillips Lytle LLP, based in Buffalo, New York. Coyne’s financial advisor is Bernard Katz of the New York/New Jersey firm of CohnReznick LLP, and its investment banker is Robert Smith of SSG Capital Advisors, LLC, based in Philadelphia. William Henrich of Getzler Henrich Associates LLC serves as the independent director of Coyne.