Tower Company Is in Chapter 11, Continues Operations; Considers Possible Liquidation
INDIANAPOLIS Customers of Rohn Industries Inc., known for self-supporting tubular steel towers used by telecommunications and broadcast companies, can expect work to continue on their projects as the company tries to rebound from financial difficulty, the company said.
The Peoria, Ill.-based Rohn Industries and five of its direct and indirect subsidiaries filed in September under Chapter 11 of the U. S. Bankruptcy Code, which allows for a company to remain in operation under the direction of a trustee while it seeks additional capital. The bankruptcy court must approve all significant business decisions while Rohn seeks Chapter 11 relief.
In its voluntary petition on Sept. 16, Rohn listed assets totaling just over $22.5 million and debts of nearly $29 million. It estimated that funds would be available for distribution to unsecured creditors.
The first meeting of creditors was expected to be held in late October in Indianapolis. The estimated number of both secured and unsecured creditors is more than 200. Of the top 20 claims from creditors, none are broadcast companies.
Coinciding with the Chapter 11 filing, Rohn entered into a $9.5 million debtor-in-possession line of credit with lenders who are part of the company’s amended credit agreement, which will allow the company to continue operations.
“Rohn continues to operate as a debtor in possession,” said Henry Efroymson, the attorney handling Rohn’s bankruptcy proceedings.
“The company is exploring all possible avenues, including reorganization and liquidation,” Efroymson said.
According to a Rohn Industries press release, “The objective of the Chapter 11 filing is to maximize recovery to creditors by facilitating an orderly sale of assets. The company is currently in discussion with a third party regarding a proposed sale.”
Second time around
Rohn manufacturers and installs telecommunications infrastructure equipment for the wireless industry. Many of its products, which include towers, poles, related accessories and antenna mounts, are used in the cellular, PCS, radio and television broadcast markets. Rohn has a manufacturing facility in Frankfort, Ind., along with offices in Peoria, Ill., and Mexico City.
This is the second time in its history that Rohn has filed for bankruptcy. The company, known as UNR Industries Inc. until a name change in December 1997, filed a petition for relief under Chapter 11 of the Federal Bankruptcy Code in 1982. A plan of reorganization was accepted by creditors and shareholders and confirmed by a bankruptcy court in 1989.
According to filings with the Security and Exchange Commission, the company employed nearly 600 workers at its facilities in December 2001. That number was trimmed to 460 employees the following month. The company announced another round of layoffs in July of this year. The number of job cuts was not disclosed.
Rohn’s bankruptcy filing in September culminated a thorny 10-month period for the company. In November 2002, the company announced it had agreed to sell substantially all of its assets to an affiliate of Platinum Equity LLC, a Los Angeles private equity firm, for approximately $8.75 million, only to announce termination of the agreement a month later, according to a company press release.
Several members of the company’s board of directors resigned in mid-2003, followed by the resignation of Rohn’s independent accountant PricewaterhouseCoopers LLP in July. Rohn was then delisted from the NASDAQ Stock Market for failure to maintain the minimum bid price requirement and began trading on the OTC Bulletin Board in July, according to a Rohn press release.
The company reported second-quarter sales this year of just over $11.5 million, a decrease of 54 percent compared to the second quarter of last year, according to company’s most recent filing with the Security and Exchange Commission. Company officials said the drop in sales was “primarily the result of the significant reduction in capital spending throughout the telecommunications industry.” It also reported a net loss of $1.7 million, or 4 cents a share, for the quarter that ended June 30.
Rohn Industries President and CEO Horace Ward failed to return several phone messages seeking comment for this story.
At least one antenna manufacturer was surprised by Rohn’s filing for Chapter 11 protection.
“Rohn has been a very popular tower with our antenna customers over the years. I’m in the dark as to why this happened,” said David Allen, Shively Labs sales manager. “I’m sure there will be some broadcasters who are in the final stages of planning new sites who will need to do some scrambling.”
Officials with Electronics Research Inc., a competitor of Rohn’s in the support structure business, said it appeared that Rohn focused almost exclusively on the wireless market the last few years.
“Rohn was very active in the wireless market, where competition and pricing pressure from major customers was particularly intense. I think they produced a high volume of business but with unacceptably low margins,” said Kinsley Jones, engineering and marketing manager for Electronics Research Inc.
Jones said Rohn certainly had a following in the broadcast industry and was primarily known for towers on the small end of the size-scale.
Dwight Rohn, who began manufacturing towers for home television reception, established the company in Peoria, Ill., in 1948. The company was organized as a Delaware corporation in 1979.