Arch Aluminum CEO discusses bankruptcy filing
Q&A with Leon Silverstein
Arch Aluminum & Glass, Tamarac, Fla., filed for Chapter 11 bankruptcy protection Nov. 25. Read the news article. Leon Silverstein, Arch president and CEO, said the economy and the resulting loss in sales led to the filing. Read a Q&A with him below.
Please describe the situation leading up to the bankruptcy.
It’s really the economy. We’ve been in business for 30 years. The company is structured and financed for growth. We’ve been through the early '80s recession, the early '90s recession [and the slowdown in 2000]. It was the size and fall of the economy that caught everybody off guard. With sales down in excess of 20 percent, it is much harder to manage through. We have done a really good job of cost-cutting and have had a positive cash flow. The problem was not being able to restructure our debt. We have a syndicated loan of seven banks. Just think about trying to get seven people to do something. And with the problems the banks have with the regulators, it’s just hard to do things.
This is a humbling experience, and I don’t want for anybody to think it’s not. This is not something we’re very comfortable with; it is just the right step at today’s time. The world has changed. Unfortunately, we’re not the first or the last company that will face this. When you look back a few years ago, [Safelite, Columbus, Ohio], [Hurd Windows & Doors, Medford, Wis.], other companies have been through this and have been very successful.
Please provide details on the bankruptcy filing.
We filed, and we have a new partner that is going through the process with us. [Grey Mountain Partners, New York City], will be our new financial partner, our investor. The goal is to be out [of bankruptcy] in 45 to 60 days. This is a very short time, especially considering the holidays. … Even with the new partnership, nothing has changed.
Are any plants closing, and how will this affect Arch’s Canadian holdings or Trulite subsidiary?
No plants are closing. For our Canadian businesses, they are operating as normal and are not impacted at all with the requirements of bankruptcy, as they are a separate subsidiary of Arch.
What comes next?
During the next 45 to 60 days, business is back to normal. From an operational standpoint, nothing changes. The biggest thing you get [during bankruptcy] is a time-out with your banks. There are not a whole lot of changes. The cost-cutting was already done as part of running our business. From the outside world, you’ll see very little. This is basically a process of going through, moving through, in order to exit bankruptcy. There isn’t going to be anything earth-shattering. Most of the news was this week.
What do you want your customers to know?
Actually, we’ve been talking to them. They’ve been great. I’ve seen unbelievable good will. The biggest thing is letting them know that we’re here. We’ll be out of this in a short time, and we’ll be in a stronger place when we get out of it. We think this downturn is going to last for another 12 to 18 months. We’re doing this to put us in a place to survive. This is more reactionary than disappearing.
Will you continue the work Arch started in emerging markets, such as solar?
We will not only continue, but things will start accelerating. If anything, being in the position we’ve been in the last few months was slowing us down. Now that we have less uncertainty, that is helping us speed up.