(Reuters) - Standard Register Co filed for Chapter 11 bankruptcy on Thursday and the printing and marketing company said it plans to sell its business to Silver Point Capital for $275 million.
The sale agreement will be subject to higher offers at a court-supervised auction, the company said in a statement. Standard Register said the bankruptcy process will cut its unsustainable obligations and position the business for long-term growth.
However, as a result of the bankruptcy the company's stock will likely be worthless. Its shares, which trade over the counter, plunged 71 percent on Thursday to 12 cents each.
Proceeds of the sale will be used to repay the company's creditors.
Standard Register has about $316 million of secured debt, according to documents filed with the U.S. Bankruptcy Court in Wilmington, Delaware. In addition, the company owes about $193.6 million to underfunded pensions and about $72 million to suppliers.
The company also said it will borrow up to $155 million to sustain its operations while in bankruptcy.
The Dayton, Ohio-based company said in court filings it has struggled with falling demand for its printed training materials and the cost of servicing its debt and pension obligations.
The company received two bids for its business prior to its bankruptcy before choosing an affiliate of Silver Point as the initial bidder at the auction. The company did not identify the other bidder in court documents.
Silver Point was also a lender to Standard Register.
The case is In re: The Standard Register Co, U.S. Bankruptcy Court, District of Delaware, No. 15-10541
Reporting by Tom Hals in Wilmington, Delaware; Editing by Chris Reese