Loewen files for bankruptcy protection
Struggling with mounting debts after a costly U.S. expansion, funeral home and cemetery operator Loewen Group filed for court protection from creditors in the United States and Canada Tuesday.
The British Columbia-based company said it has petitioned to reorganize under Chapter 11 of the U.S. Bankruptcy Code and the Companies' Creditors Arrangement Act in Canada.
"The filings will enable the company to move forward with the implementation of its strategic plan while it restructures its burdensome debt load," said company chairman John Lacey in a statement.
Loewen said its U.S. subsidiaries have a commitment of $200 million from First Union National Bank to cover trade and employee obligations and other cash needs during the restructuring. Its Canadian operations "have sufficient liquidity to fund daily operations."
Loewen's problems stem from heavy debt taken on to finance an aggressive strategy of cemetery acquisitions over the last three years.
The company is carrying about $2.3 billion US in debt and must renegotiate $300 million US of asset-backed notes before September 15.
Tuesday's move came as a $17-million interest payment came due.
Lacey said the company intends to return to its traditional focus on funeral home operations.
The company employs about 16,000 people and owns and operates more than 1,100 funeral homes, and 400 cemeteries in the United States, Canada and the United Kingdom.
Loewen's stock, which once traded at more than $41 a share, is now valued at less than one dollar a share.