Zenith Files for Bankruptcy
GLENVIEW, Ill. (AP) _ Zenith Electronics Corp. filed for bankruptcy on Monday as part of a long-planned overhaul of the struggling maker of televisions, VCRs and digital equipment.
The Glenview-based company said the Chapter 11 filing in U.S. Bankruptcy Court in Wilmington, Del., was one of the final steps in its restructuring, which is aimed at reducing debt and de-emphasizing manufacturing.
The bankruptcy plan was pre-approved by creditors and bondholders, and the financing for it has already been lined up, ``so the plan should move swiftly through the courts to minimize the impact on customers, suppliers and employees,″ said Zenith spokesman John I. Taylor.
Zenith announced last year that it would file for bankruptcy after coming up with a turnaround package that would essentially remake the company.
``Our operational restructuring _ transforming Zenith into a sales, marketing and technology company _ is proceeding on schedule,″ said Jeffrey P. Gannon, president and chief executive officer.
The company’s chief stockholder, LG Electronics of South Korea, has agreed as part of the restructuring to exchange $200 million of its debt claims for 100 percent ownership of the reorganized Zenith.
Zenith earlier this year obtained a $300 million line of credit from Citicorp North America Inc. to cover its debts during the restructuring period.
LG Electronics, which owns 55 percent of the company’s outstanding shares, has seen what the company said Monday was a ``disappointing″ return for its investment since acquiring its majority interest in November 1995.
But John Koo, LGE’s vice chairman and chief executive officer, said the company remains committed to the restructuring ``because we believe that a restructured, refocused Zenith can be an effective competitor in the North American television industry.″