* Says looking to acquire Arctic Glacier
* Has about $530.8 mln in liabilities, $434 mln in assets
* Says secured $70 mln in DIP financing
* Centerbridge indicates interest in financing Arctic
By Tanya Agrawal and A. Ananthalakshmi
April 12 Reddy Ice Holdings Inc filed
for bankruptcy and said it was bidding for Canadian rival Arctic
Glacier Income Fund, as the packaged-ice maker looks to cut debt
and beef up its business after years of battling government
investigations, lawsuits and intensifying competition.
The industry has been struggling since 2007, when the U.S.
government probed Reddy Ice, Arctic Glacier and
privately owned Home City Ice for an alleged conspiracy to
eliminate smaller rivals and keep retail prices higher than
Reddy Ice and Arctic Glacier -- which filed for bankruptcy
earlier this year -- racked up heavy debt battling lawsuits and
Industry experts had long expected a merger of Arctic
Glacier and Reddy, the largest manufacturer and distributor of
packaged ice in the United States, as new competition from
ice-vending machines also severely hurt the business.
Retailers, the industry's main customers, also started
making and selling their own ice, further eating into sales of
The two companies lost a combined $300 million over the past
two years and their stock prices plummeted.
Dallas-based Reddy Ice was delisted from the New York Stock
Exchange and Arctic Glacier was kicked off the Toronto Stock
Arctic Glacier, which is Canada's largest and United States'
second biggest ice maker, started looking for buyers in February
after filing for bankruptcy protection.
"I would say the most logical strategic buyer (of Arctic
Glacier) is Reddy Ice," said Mary Gilber, an analyst with
Imperial Capital. "The two businesses are complementary from a
geographic standpoint and (it) makes sense for both parties."
In a filing with the U.S. Securities and Exchange
Commission, Reddy Ice said hedge fund Centerbridge -- which is
also one its largest lenders -- has indicated its interest in
fully financing the Arctic acquisition.
In a separate statement, Arctic Glacier, which has a market
value of $20.9 million, said it had received non-binding letters
of intent from several interested parties to acquire or to
invest in the company.
Under the prepackaged bankruptcy plan, Centerbridge will
forgo Reddy Ice's debt in exchange for equity in the reorganized
Reddy Ice's total assets were $434 million and liabilities
were $530.8 million, as of December 31, 2011.
The company sells ice in four to 50 pound bags primarily to
supermarkets, mass merchants and convenience stores.
The company, whose largest customer is Wal-Mart Stores Inc
and its Sam's Club unit, said it had secured $70 million
in debtor-in-possession financing from Macquarie Bank Ltd.
It would have $50 million in exit financing once it emerges
from bankruptcy, the company said.
All terms of the plan are subject to court approval.
"We expect to emerge from this restructuring as a much
stronger company that is well positioned for investment in
growth and enhanced profitability," said Gilbert Cassagne, chief
executive officer of Reddy Ice.
The company, which is looking to emerge from bankruptcy
within 45 days, has retained FTI Consulting and Jefferies as the
financial advisor and law firm DLA Piper as corporate counsel.
The case is In re: Reddy Ice Holdings Inc, U.S. Bankruptcy
Court, Nothern District Of Texas, No:12-32349-11.