New York-based metal-cutting machine toolmaker Hardinge Inc has filed for Chapter 11 protection in the Delaware bankruptcy court, citing over $100 million in debt and intentions to pursue a bankruptcy sale.
Hardinge entered Chapter 11 after defaulting on its prepetition credit agreement. Chief Restructuring Officer Adrian Frankum stated in a first-day declaration that the prepetition lender was unwilling to provide additional funding. Consequently, Hardinge found a debt buyer, Centre Lane Partners V LP, which also agreed to provide a bridge loan. Additionally, Hardinge is in discussions with a Centre Lane affiliate regarding a stalking horse bid for its assets.
The company has approximately $106 million in funded debt, originating from a credit agreement in September 2022. This agreement included a $75 million initial term loan and a $35 million revolver. Last week, the credit agreement was sold and assigned to Centre Lane, which also agreed to a $2.9 million term loan.
Factors leading to bankruptcy
Several factors contributed to Hardinge’s bankruptcy, including the failure to obtain regulatory approvals for the sale of its China unit, difficulties with purchasing a German tool company, unsold inventory, and macroeconomic pressures, particularly in China. These issues tightened the company’s liquidity, strained vendor relationships, and impacted manufacturing operations.
In May, Hardinge began exploring its options and determined it lacked sufficient liquidity to sell itself outside of court. The prepetition lenders refused to provide additional funding, prompting Hardinge to seek a debt buyer. The company received eight proposals and finalised the debt sale to Centre Lane on July 22. Hardinge is now finalising a stalking horse agreement with a Centre Lane affiliate.
To support its Chapter 11 proceedings, Hardinge aims to utilise a $27.35 million debtor-in-possession term loan facility from a Centre Lane affiliate. Frankum noted that Hardinge has faced pressing liquidity issues for nearly two months, narrowly avoiding Chapter 7 bankruptcy due to these concerns.
Company history and operations
Founded in 1890 in Chicago as a producer of watchmakers’ tools, Hardinge relocated its headquarters to Elmira, New York, in the 1920s. The company has since expanded internationally, with manufacturing sites in New York, Illinois, Michigan, Ohio, Germany, China, Switzerland, and India. Hardinge employs approximately 1 700 people.
Besides Hardinge the company’s brands include Buck Chuck, Forkardt, Hauser, Jones & Shipman, Kellenberger, OTW, Tschudin, Usach, Voumard asnd Weisser.
