Acme Holdings Seeks Deal on Junk-Bond Debt : Investing: The Irvine firm is asking its bondholders to trade $78 million in the securities for 40% of a newly formed company.
Acme Holdings Inc., an equipment rental company, said Tuesday that it is asking its bondholders to trade $78 million of junk-bond debt for 40% of a newly formed company.
Under the Irvine company’s proposed recapitalization plan, Acme Holdings would merge with Acme Acquisition Holdings Corp., an affiliated business. Bond investors will vote in the next few months on whether to exchange their debt for a stake in that company.
Projected annual revenue for the combined entity would be about $103.8 million, the company said, with a charge of $1.4 million anticipated for the restructuring.
Earlier this month, Acme said it had hired Donaldson Lufkin & Jenrette, a New York investment company, to help recapitalize the six-year bonds it sold in 1993 for capital spending.
The company said it will be unable to make a $4.6-million interest payment due Dec. 1 on the junk bonds because it must spend as much as $10 million this year just to maintain its aging rental inventory.
Acme’s financial woes prompted Moody’s, a bond rating agency, to downgrade the company’s guaranteed senior notes to “Caa” from “B3,” a move that probably will make it more expensive for the company to borrow money.
In a statement released Tuesday, Acme reported a second-quarter loss of $2.1 million, compared to a loss of $1.9 million for the same period a year earlier. Revenue for the quarter was $16.3 million, up from $15.2 million a year earlier.
For the first half, the company posted a loss of $3.9 million, compared with a loss of $2.9 million for the same period last year. Six-month revenue was $33.1 million, up from $30.5 million.