Mark IV has announced that it has filed for Chapter 11 of the US Bankruptcy Code. 

The company said it was taking this action to reduce its debt, improve its capital structure and further strengthen its competitive position.

None of Mark IV's operations outside of the United States were included in the filing. Mark IV's Intelligent Vehicle Highway Systems (IVHS) operations were also excluded from the filing.

The company said it has already reached agreement in principle with a steering committee of its senior lenders on a plan of reorganisation and new capital structure for the reorganised company.

The company said that since it already has an agreement in principle in place on its restructuring with its secured lenders, it expects to 'achieve plan confirmation and successfully complete the reorganisation expeditiously'.

"Ours is a balance sheet problem, not an operational one.  The actions we have announced today bring us closer to resolving that issue," said Chief Executive Officer of Mark IV Power Transmission, Jim Orchard.

"The Chapter 11 filing and the progress we have already made with our senior lenders sets the foundation for achieving a rational capital structure to support the company's business going forward."

Mark IV also announced that it has received commitments for up to $90 million in debtor-in-possession (DIP) financing from a group of lenders led by J.P. Morgan that will be used to fund post-petition operating expenses, and to meet its obligations to employees, customers, and suppliers.  A large portion of these funds will also be used outside the U.S. to help ensure the continued adequacy of working capital throughout the Company's global business units.

"Although even during these challenging economic times most of our businesses continue to generate double-digit EBITDA margins, the fact remains that our debt load must be brought in line with our current cash flows.  We have been encouraged by the vote of confidence we have received from our senior lenders.  Their willingness to provide us with DIP financing and invest in the future of our company demonstrates their confidence in our business model and our ability to achieve sustainable profitability," said Mr. Orchard.

Recently, the company has taken a number of steps to lower its cost structure, including a 20 percent reduction of salaried work force in its North American operations, closure of a North American factory, and consolidation of redundant activities and offices.

"While we have made significant progress in lowering our cost structure and improving our operations, the next step to achieving bottom-line, sustainable profitability after debt servicing is restructuring our balance sheet.  We fully expect to emerge from Chapter 11 as a stronger company with a capital structure that supports our competitive strengths," Mr. Orchard said.