Reddy Ice Holdings Inc., the largest packaged ice producer in the U.S., has revealed that it is considering filing for bankruptcy protection and is reviewing its options as it looks to the future.
According to a recent article in The Wall Street Journal, the news follows a bankruptcy filing in February by Arctic Glacier Inc., which is the second-largest ice maker and Reddy Ice’s main competition.
In general, the same article states that ice delivery businesses have gradually seen their profits decline as freezing and packaging machines make it possible for grocery and convenience stores to package their own ice.
Reddy Ice in particular has struggled since 2008, when federal agents investigated the company for alleged industry-wide antitrust violations. No charges were ever brought to the company and the case was eventually closed, but the entire ordeal still damaged the company’s finances considerably.
When looking at Reddy Ice’s finances, for 2011 the company is expected to report net losses of $68.6 million. This would be a $40.5 million increase in the amount of losses from the previous year. Additionally, while the company had $8.8 million in cash on hand on Dec. 31, as of Friday, the company had no cash on hand.
Looking to the future for Reddy Ice, while bankruptcy is an option, the company is talking to financial experts and other stakeholders about measures it can take to reduce its debt and change its capital structure. If those talks are unable to produce a viable solution, what is known as a “prepackaged” bankruptcy, may end up being the best financial solution.
Source: The Dallas Morning News, “Dallas-based Reddy Ice talks of possible ‘prepackaged’ bankruptcy,” Karen Robinson-Jacobs, April 2, 2012