AMF Bowling Worldwide Inc., the world’s largest bowling-alley operator, filed for bankruptcy for the second time in 11 years with a plan it says will “significantly” cut debt and strengthen its balance sheet.
The company listed both assets and debt of $100 million to $500 million in Chapter 11 documents filed today in U.S. Bankruptcy Court in Richmond, Virginia. Chapter 11 is the section of the U.S. Bankruptcy Code used by companies to reorganize.
The company, based in Mechanicsville, Virginia, runs about 300 bowling centers with more than 20 million visitors a year, according to its website. AMF filed for reorganization in July 2001 and exited with a confirmed Chapter 11 plan in February 2002 by giving unsecured creditors 7.5 percent of the new stock.
“With the support of our key financial stakeholders, we will recapitalize our balance sheet and reduce our burdensome debt load and related costs,” Steve Satterwhite, AMF’s chief financial officer, said in a statement today.
AMF said it filed for bankruptcy to implement a pre-arranged restructuring agreement reached with holders of a majority of its $216 million first-lien debt and iStar Financial Inc., the landlord for most of its bowling centers. The restructuring is subject to competing offers through a court-supervised auction.
Under terms of the restructuring, senior lenders will receive all the stock in the reorganized company and proceeds of a $150 million term loan when AMF emerges from Chapter 11, or payment in full upon the company’s sale to a third party, according to court papers.
A majority of the first-lien lenders agreed to provide $50 million in new financing for the Chapter 11 effort, with a lien ahead of existing debt. AMF today received approval from U.S. Bankruptcy Judge Kevin Huennekens to borrow as much as $35 million of the financing.
First-lien lenders providing the new financing are Liberty Harbor Master Fund LP, Midtown Acquisitions LP and funds affiliated with Credit Suisse Group AG and Goldman Sachs Group Inc., according to court papers.
Second-lien creditors, owed $80 million, will receive warrants under the plan, according to court documents. Recovery amounts in the event of a sale weren’t disclosed.
AMF started out as American Machine & Foundry Co. in 1900 in New Jersey, making equipment for the tobacco industry, according to Harvard Business School archives. Before World War II, the company designed automatic machinery for cigarette-making, bread-wrapping and necktie-manufacturing.
The company introduced the first fully automated “Pinspotter” in 1946. The device picked up and reset bowling pins with mechanical suction cups, a task previously done by hand. The product was reintroduced in 1951 after the first prototype proved unreliable. About 30,000 machines were installed by 1957.
Other postwar contracts included nuclear reactors and launching systems for intercontinental ballistic missiles. The company also branched out into Ben Hogan-brand golfing gear, Roadmaster bicycles and refrigerator-defrost timers.
The company at one point owned Harley-Davidson, Head USA sports and Hatteras Yachts. Minstar Inc. bought the company in a hostile takeover in 1985 and AMF Bowling was spun off. AMF Bowling was acquired by the private-equity firm CHS Capital in 2004, according to data compiled by Bloomberg.
The case is In re AMF Bowling Worldwide Inc., 12-36495, U.S. Bankruptcy Court, Eastern District of Virginia (Richmond).