THL-backed Nortek files prepackaged bankruptcy

Thomas H Lee Partners-backed Nortek, a maker of building products, has entered bankruptcy with a prepackaged reorganisation plan that will reduce the company’s debt by $1.3 billion.

THL acquired Nortek in 2004 in a $1.75 billion deal.

Nortek, which manufactures air conditioning, heating, ventilation and home technology products for residential and commercial construction, reported assets of $1.6 billion and liabilities of $2.8 billion in its bankruptcy filing.

The company has a capital structure that includes $750 million 10 percent senior secured notes due 2013; $625 million 8.5 percent senior subordinated notes due 2014; $403 million 10.75 percent senior discount notes due 2014; a $286 million senior unsecured loan and a $135 million asset-backed lending facility.

Nortek also has $10 million outstanding in senior subordinated notes due 2011.

Under the terms of the agreed-upon plan, certain debt holders will get the bulk of the equity in the reorganised company, while other holders of debt will get new notes.

Additional unsecured creditors will be paid in full, and the equity in the company, held by THL, will be wiped out.

Another of the firm’s portfolio companies, mattress maker Simmons, filed for bankruptcy in September with plans to be sold to Ares Management and the private equity unit of Ontario Teachers’ Pension Plan in a $760 million deal.