The effects of the struggling economy on the trucking industry have hit JHT Holdings Inc., a holding company specializing in the transportation of heavy- and medium-duty trucks.
The Kenosha, WI-based company and its 16 subsidiaries filed Chapter 11 bankruptcy on Tuesday in the U.S. Bankruptcy Court for the District of Delaware. The filing was voluntary and pre-negotiated with many of its lenders, the company said. Chapter 11 filings allow a company to reorganize financially while seeking relief from creditors.
“Today’s action is simply a strategic financial decision on the part of JHT Holdings that will not impact the day-to-day operations of our subsidiary companies,” CEO James Welch said. “This approach is in the best interest of employees, customers and suppliers because it will enable us to dedicate more of our capital to business operations. Once the financial restructuring efforts are complete, we will be in an even better position to serve customers and capitalize on new opportunities within the industry.”
A privately held company, JHT has entered into a debt-to-equity swap with a significant number of its lenders. Under the plan, lenders will convert portions of the debt to a share of ownership, reducing the outstanding bank debt by 40%, the company said.
“The company and lenders are in agreement with our strategy and anticipate emerging very quickly from Chapter 11,” Welch said. “Our financing commitment provides reassurances that we will meet or exceed our customers’ expectations for exceptional, uninterrupted service.”
JHT Holdings transport 95% of new Class 8 trucks and roughly 50% of Class 5 through 7 trucks in North America, it said. In operation since 1933, JHT employs approximately 1,300 drivers. According to Ward’s Automotive, in the January to May period, sales of Class 8 trucks were down 30% in 2008 from 76,643 in 2007 to 53,631 this year. Medium-duty sales have seen a similar drop, from 97,285 to 79,621, a 27.4% decline.
The company also has secured up to $25 million in debtor-in-possession financing to solidify its liquidity position. The plan includes the possibility of $35 million in additional financing upon emergence from Chapter 11.
“JHT and its lenders have great confidence in the future success of the company and the fundamental strength of our business model,” Welch said. “Our lenders have demonstrated this confidence through strong, enthusiastic support of the reorganization plan and their commitment to provide both short- and long-term financing.”