Champion Enterprises (NYSE:CHB) Files for Chapter 11 to Restructure Debt

Champion Enterprises, (NYSE:CHB), a leader in factory-built construction, recently announced that it and its domestic operating subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code. The Company is taking this action to improve its capital structure and further strengthen its competitive position. Champion Enterprises operations in the United Kingdom and Canada were not included in and will not be impacted by the filing.Champion Enterprises  obtained $40 Million New Credit Facility. The
Operations will  Continue During Restructuring Process and International Operations Excluded from Filing.

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In conjunction with the filing, Champion Enterprises has obtained a $40 million debtor-in-possession (DIP) credit facility from certain of its current lenders that will be available to fund post-petition operating expenses and to ensure that it continues to meet its obligations to employees, customers, and trade partners. A portion of these funds will be available for use outside the U.S. to ensure the continued adequacy of working capital for the Company's non-U.S. Operations. "Our Company has operated for many years with a significant debt load. As we've had to downsize to keep up with the declining markets, this debt has become increasingly burdensome," said Champion Chairman, President and Chief Executive Officer William C. Griffiths. "Despite our best efforts to reposition the company for diversified growth, the continued challenging economic conditions both here and abroad have negatively impacted our capacity for debt. "As a result, management and the Board decided that the Chapter 11 process provides us with the most timely and orderly means to restructure our debt obligations and facilitate a sale and recapitalization of the Company so we can be best positioned to capitalize on future opportunities. Filing for Chapter 11 will allow us to maintain our going concern value for the benefit of our stakeholders while we address current market realities."  Mr. Griffiths noted that in response to the challenging housing market and impaired capital markets, Champion has already successfully implemented a number of initiatives aimed at improving operating performance, including the reduction of overhead costs, closure or idling of 15 underperforming manufacturing facilities in the U.S. since mid-2006, staff reductions at operating plants to better match current demand levels, increased focus on multi-family, military and commercial sales opportunities and enhancement of single-family home product offerings.  "Our balance sheet is the problem, not our operations. The next step in our reorganization is to restructure our balance sheet and position our company to capitalize on the anticipated recovery in the residential and commercial construction markets," said Mr. Griffiths. Champion Enterprises emphasized that daily operations are expected to continue throughout the restructuring.

Champion Enterprises filed nearly 20 "first-day motions" covering the continuation of employees and business operations, as well as post-petition DIP financing, the continuation of supplier payments, customer warranty programs and retailer rebate programs, and other case administration matters. The Company anticipates that these first-day motions will be heard this week. Pursuant to the relief requested in those motions, homes will be sold, manufactured and delivered as normal and employees will be paid and continue to receive the same benefits as before the filing. "Despite the current challenges in our core markets, we still believe there are considerable opportunities in the factory-built construction industry in the future," said Mr. Griffiths. "Addressing our liabilities through Champion Enterprises bankruptcy filing is the last step in a comprehensive restructuring we began some time ago. We fully expect to proceed through this restructuring swiftly and with the strong support of our lenders. Throughout the process we will continue designing and manufacturing high quality products for our retailers, builders and developers."