Note: This story is updated from the
Industry giant Latham International has filed for Chapter 11 bankruptcy protection.
Based in Latham, N.Y., the firm owns vinyl-liner-pool producer
Latham Manufacturing; fiberglass-pool maker Viking Pools,
LLC; cover manufacturer Coverstar, LLC; and Kafko
Corp., which makes vinyl-liner pools, covers, domes and other
Latham President/CEO Mark Laven said the move is
“We were not forced into bankruptcy,” Laven said.
“We took this action voluntarily, proactively, in order to
address the amount of debt that the company had on the
The plan would switch ownership of the firm’s assets to a
newly formed company. As far as operations go, Laven said no
changes will occur and that the company will retain its current
management, staff, facilities and brands. Latham currently has 551
employees in the United States.
“[The filing] means one and only one change for the
company — that it is going to have less outstanding debt on
its books,” Laven said.
But speed is of the essence, and Latham officials wanted to
fast-track the proceedings to protect the firm. “I believe
that the debtors will run out of cash in early February 2010 if
they do not emerge from Chapter 11 before then,” Laven stated
in the court filing.
The company also hoped to announce bankruptcy confirmation
before the Atlantic City Pool & Spa Show in late January to
avoid hurting 2010 sales. This would assure customers that
financial issues have been resolved, company officials stated.
To expedite the process, the firm filed a prepackaged bankruptcy
plan, in which the debtor and creditors devised a reorganization
strategy ahead of the filing. These types of arrangements, known to
put the filing company in a stronger position, must receive
approval by shareholders beforehand, and tend to move faster. If
the plan is approved, Latham expects to be out of bankruptcy by
Feb. 1, 2010.
Laven said he expects to hear from the court in a matter of days
as to whether or not it approves the proposal.
“The company is operating very well,” Laven said.
“We are profitable and current with our payments to all of
our vendors, and [the] obligations that we have servicing our
lenders. … All of our obligations have been met in a timely
manner. As the nation’s largest manufacturer of inground
swimming pools, our sales have declined, but I’m proud to say
not nearly at the same rate as the overall market
In its bankruptcy filing, Latham attributed the firm’s
difficulties to the economic downturn. In response to market
conditions, the company “made significant head-count
reductions,” trimmed its manufacturing facilities from 32 to
15, and underwent an inventory reduction initiative between 2007
and 2009, according to the filing.
The firm reported nearly $67 million in assets and $239.4
million in debt. For the 2009 fiscal year through November, Latham
reported net sales of almost $90.2 million and losses of $181.4
Once the arrangement is finalized, Latham’s senior lenders
will own the company, while most of its current stockholders will
walk away empty-handed. Those include Covington, La.-based
distributor PoolCorp, which owns 37 1/2 percent of the company.
This came as a result of a 2004 merger, when Latham received fellow
vinyl-liner maker Fort Wayne Pools from PoolCorp in exchange for
PoolCorp President/CEO Manuel J. Perez de la Mesa said that
despite this reality, the decision was voted on unanimously.
“It was the right thing to do for the company,” he
said. “It’s in Latham’s best interest to have a
much lower level of debt so it can operate with a lot more
flexibility and be more successful over time, even if it means that
you lose your equity value.”
Perez de la Mesa added that during last year’s third
quarter, PoolCorp reported its Latham investment value as zero.
Other stockholders included Boca Raton, Fla.-based
private-equity firm Brockway Moran & Partners, which also owned 37 1/2
percent. Another 4 percent is owned by Apollo
Investment Corp., and the rest is held by officers, employees
and former employees of Latham. Most or all of the
manufacturer’s subordinated lenders will go unpaid.
Perez de la Mesa observed that like fiberglass-pool
manufacturers, Latham and other vinyl-liner pool producers are
vulnerable. “Those whose business is weighted heaviest in new
construction are the ones that are affected the most,” he
But he characterized Latham as well-positioned. “Latham is
still profitable before interest and taxes. But given the
current level of profitability, the current level of debt was too
high. So it needed to restructure. Now it will have a very
manageable level of debt. They’ll continue being profitable
and, as the industry recovers in three to five years, they’ll
do very well.”
Latham is the largest producer of inground pool components and
accessories in North America, according to company officials. In
addition to the brands mentioned, the firm also is affiliated with
Pools, Fort Wayne Pools, Elite,
Sterling, Performance, Technician, Triac and CPC, according to the company’s