Vitro America's Case "Unlike Any Other Bankruptcy in Our Industry," Says Arturo Carrillo; Carrillo Talks to™ About Upcoming Asset Sale
April 6, 2011

Arturo Carrillo

Arturo Carrillo, president and chief executive officer of Vitro America, wants to send a message to the company's suppliers: "We're very humbled. We never really thought we would be here and that this situation would arise," he told™ this afternoon in discussing this morning's announcement that the Memphis, Tenn.-based company, and all its U.S. operations including Binswanger Glass, had entered into an asset purchase agreement with a private equity firm.

"They [suppliers] out of all people will have a little more stress about this. But this has been unlike any other bankruptcy that has happened in our industry," Carrillo pointed out. "This is not because of our bank; we have significantly more assets than debt … I can't guarantee [suppliers will] be fine but there's a high expectation that they would. Any of the suppliers who have visited our plant have seen the amount of equipment there; we own all our significant real estate; we have very high levels of inventory; and we are way beyond our debt base - our debt is pretty low. This is a different type of issue. We didn't get here because the suppliers or banks came after us," Carrillo said.

Rather, the U.S. subsidiary of glass manufacturer Vitro SAB had arrived at this point after four Vitro SAB creditors, unhappy with a debt settlement offer, had filed a petition for involuntary bankruptcy in November 2010 against 15 of Vitro's U.S. subsidiaries. Last week, a federal bankruptcy judge had ruled that he would decide at a later, unknown date whether subsidiaries of Mexico-based glass manufacturer Vitro SAB would be placed into involuntary Chapter 11 bankruptcy.

According to Carrillo, Vitro America had been preparing a "contingency plan" for some time, should the bankruptcy ruling have been enforced. He noted that Vitro SAB was "fully onboard" with the decision. Following last week's trial, Carrillo said it became clear that an asset sale was the best option for the U.S. company.

"We were at the trial. We saw how it went and that, and further knowledge of what would happen after the trial even if it won - basically, further litigation - and we realized that we just needed to get out from underneath this. [There was] no way forward without removing ourselves from underneath this litigation," Carrillo said.

Grey Mountain Partners LLC, the equity firm in question, has been in tentative discussions with Vitro America for about a month.
"Grey Mountain Partners has clearly been interested in the industry," Carillo said. (Grey Mountain was the stalking horse bidder of flat glass fabricator Arch Aluminum & Glass' assets in January 2010.) "They've been actually calling different people in the industry and at one point they called us. We decided a little more than a month ago that prudent contingency planning was something we should do. We reached out to our bank to talk about financing and we reached out to Grey Mountain Partner to say, 'look, we'd like to have a contingency plan.' And they said 'sure, we'd love to do that, we've been interested in this industry.'" Carillo added, "Frankly, the litigation with our parent company has been very public, and whoever was interested would have called us anyway."

Carrillo expects the interest from the firm comes from a realization "that the glass industry has gone through the worst of it, and that they are at the bottom of a cycle and that if they get to come in right now they will capture the up side of the industry." (A Grey Mountain Partners representative had not responded to's request for comment as of press time.)

Carrillo said he has been encouraged by conversations with the firm thus far. "We had had conversations with their thoughts on this industry and their thoughts on this company and frankly they think we have a good platform, they clearly see some value in the people and the management and the asset base," he said.

Due to the public nature of the litigation, Carrillo said, talks with employees have been ongoing as well. "Certainly, we've been talking to employees. This bondholder litigation has been very public. We've been telling them for some time the possibilities," he said. "Last week, we went in and clearly explained what our contingency plans were, which is the financing, the potential sale of the company. When we came to the realization that these were no longer just going to be contingency plans, this is what we needed to do, we began communicating with our suppliers and employees immediately. From personal calls to conference calls, emails, we tried as always to be very straightforward with everyone in telling them what's going on."

No immediate changes are expected, and Carrillo maintains that it will be business as usual for customers.

"From a customer's perspective, they shouldn't be affected," he said. "Our employees should be delivering their glass, producing the glass, fabricating the glass today. Our employees should be installing glass, installing windshields, going to jobsites as they always have."

Despite all his confidence in going forward, and all the planning that has come before, Carrillo noted that the upcoming asset sale has been difficult to process.

"I've got to say, it was always a contingency plan, and it was always easier to talk about contingency planning - but we never really thought this would happen, to be honest. We've been acquiring companies, we've been investing and we've been launching new product lines. We got caught in the crossfire. This has never been about us, it's always been a Vitro SAB bondholder issue that, unfortunately, we got dragged into," Carrillo said.

He added, "This is going to be somewhat difficult for [suppliers] and I'm sorry for putting them through the stress. We never really wanted to be here, and we're sorry. But we'll try to work with them and we're open to them, to have conversations. This is not a process to clean our balance sheet."

The sale is expected to conclude within 60 to 90 days. Stay tuned to™ for further details as they emerge.

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