April 12, 2012 / 10:34 AM / 6 years ago

UPDATE 4-Reddy Ice files for bankruptcy protection

* Says looking to acquire Arctic Glacier

* Has about $530.8 mln in liabilities, $434 mln in assets

* Says secured $70 mln in DIP financing

* Centerbridge indicates interest in financing Arctic Glacier buy

By Tanya Agrawal and A. Ananthalakshmi

April 12 (Reuters) - Reddy Ice Holdings Inc filed for bankruptcy and said it was bidding for Canadian rival Arctic Glacier Income Fund, as the packaged-ice maker looks to cut debt and beef up its business after years of battling government investigations, lawsuits and intensifying competition.

The industry has been struggling since 2007, when the U.S. government probed Reddy Ice, Arctic Glacier and privately owned Home City Ice for an alleged conspiracy to eliminate smaller rivals and keep retail prices higher than market levels.

Reddy Ice and Arctic Glacier — which filed for bankruptcy earlier this year — racked up heavy debt battling lawsuits and government investigations.

Industry experts had long expected a merger of Arctic Glacier and Reddy, the largest manufacturer and distributor of packaged ice in the United States, as new competition from ice-vending machines also severely hurt the business.

Retailers, the industry’s main customers, also started making and selling their own ice, further eating into sales of packaged ice.

The two companies lost a combined $300 million over the past two years and their stock prices plummeted.

Dallas-based Reddy Ice was delisted from the New York Stock Exchange and Arctic Glacier was kicked off the Toronto Stock Exchange

Arctic Glacier, which is Canada’s largest and United States’ second biggest ice maker, started looking for buyers in February after filing for bankruptcy protection.

“I would say the most logical strategic buyer (of Arctic Glacier) is Reddy Ice,” said Mary Gilber, an analyst with Imperial Capital. “The two businesses are complementary from a geographic standpoint and (it) makes sense for both parties.”

In a filing with the U.S. Securities and Exchange Commission, Reddy Ice said hedge fund Centerbridge — which is also one its largest lenders — has indicated its interest in fully financing the Arctic acquisition.

In a separate statement, Arctic Glacier, which has a market value of $20.9 million, said it had received non-binding letters of intent from several interested parties to acquire or to invest in the company.


Under the prepackaged bankruptcy plan, Centerbridge will forgo Reddy Ice’s debt in exchange for equity in the reorganized company.

Reddy Ice’s total assets were $434 million and liabilities were $530.8 million, as of December 31, 2011.

The company sells ice in four to 50 pound bags primarily to supermarkets, mass merchants and convenience stores.

The company, whose largest customer is Wal-Mart Stores Inc and its Sam’s Club unit, said it had secured $70 million in debtor-in-possession financing from Macquarie Bank Ltd.

It would have $50 million in exit financing once it emerges from bankruptcy, the company said.

All terms of the plan are subject to court approval.

“We expect to emerge from this restructuring as a much stronger company that is well positioned for investment in growth and enhanced profitability,” said Gilbert Cassagne, chief executive officer of Reddy Ice.

The company, which is looking to emerge from bankruptcy within 45 days, has retained FTI Consulting and Jefferies as the financial advisor and law firm DLA Piper as corporate counsel.

The case is In re: Reddy Ice Holdings Inc, U.S. Bankruptcy Court, Nothern District Of Texas, No:12-32349-11.

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