Dimac Files Reorganization Plan for Court Approval

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Dimac Corp., St. Louis, a direct response marketing solutions company, announced this week it has filed its Disclosure Statement and Plan of Reorganization with the U.S. Bankruptcy Court in Wilmington, DE, setting the stage for the company to formally emerge from Chapter 11.

Dimac and its subsidiaries filed voluntary petitions for reorganization under Chapter 11 in April in an effort to improve its overall profitability and cash flow. In addition, its AmeriComm Holdings unit said over the summer that it planned to explore the sale of several noncore business units. Dimac said it hopes to emerge from Chapter 11 by the end of the year.

The plan of reorganization provides for an additional line of credit to be extended to Dimac by its lenders in the form of an 18-month term loan, which will provide liquidity when it emerges from Chapter 11. Upon confirmation and after the sale of the noncore businesses, Dimac expects its total indebtedness to be reduced from about $391 million to $107 million, subject to adjustment for the actual proceeds of the sale of selected business units. Annual cash interest expense will be lowered from more than $39 million to about $9 million.

"Over the past five months, we have enhanced the management team by hiring key individuals to lead our businesses, taken advantage of opportunities to consolidate operations, as well as improve profitability and the long-term prospects for the company," said Robert Kamerschen, chairman and CEO of Dimac. "We made difficult but necessary decisions to streamline the organization by deciding to place five of our noncore businesses for sale, allowing the management team to focus on the four remaining business units."

Kamerschen said the four remaining business units the company intends to focus on are Dimac Direct, DMW Worldwide, MBS/Multimode and Palm Coast Data.

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