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Atrium reaches agreement on restructuring plan

NEWS HIGHLIGHT

Atrium reaches agreement on restructuring plan
Atrium Companies, Inc. has announced that it has reached agreement with more than two-thirds of its senior secured lenders on a plan to reduce the company’s outstanding debt.

Jan. 20, 2010 – Atrium Companies, Inc. has announced that it has reached agreement with more than two-thirds of its senior secured lenders on a plan to reduce the company’s outstanding debt by more than $350 million, or more than 50 percent of its existing debt, through a “pre-negotiated” restructuring of its balance sheet.

To implement the balance sheet restructuring, the Company has filed voluntary Chapter 11 petitions with the United States Bankruptcy Court in Wilmington, Delaware, and the Company’s Canadian subsidiary initiated reorganization proceedings under the Companies’ Creditors Arrangement Act (CCAA) in the Ontario Superior Court of Justice in Toronto.

Atrium intends to move forward with the restructuring on an expeditious basis and complete the restructuring process in approximately three to four months. The company today filed with the court its proposed plan of reorganization (the “Plan”) and related disclosure statement, which Plan is supported by more than two-thirds of its senior secured lenders and contemplates, among other things, a $125 million new equity investment from the Company’s current majority equity owner, Kenner & Company, Inc., and its co-investor, Golden Gate Capital.

The company has secured a commitment for Debtor-in-Possession (DIP) financing of $40 million from its prepetition secured lenders, which in addition to cash on hand and ongoing cash flow from operations, will provide ample liquidity to meet normal operating costs during the restructuring process.

Atrium and each of its subsidiaries intend to operate as usual during the debt restructuring process, and existing management will remain in place. The company expects to deliver on all commitments to customers and honor all warranties in the normal course. The company does not anticipate any layoffs or facility closings as a result of the debt restructuring, and plans to continue to pay all employee wages and benefits in the normal and ordinary course. Suppliers will be paid under normal terms for goods and services provided after the filing date of January 20, 2010. In addition, and subject to its approval, the Plan provides for the payment in full in cash of all valid claims for goods and services provided to the Company before the filing, during which time the Company has remained current on all of its trade-related payment obligations.

“The balance sheet restructuring announced today will substantially reduce our outstanding debt and put Atrium in a much stronger financial position to grow our business over the long term,” said Gregory T. Faherty, President and Chief Executive Officer of Atrium. “We have already done the hard work of lowering our cost structure and reducing excess capacity in light of the difficult environment under which we have been operating for more than three years. And, we are already experiencing the positive impact of these initiatives through increased profitability. Now, as part of the restructuring announced today, we will put in place a healthier capital structure that is more appropriate to the current size of the market, while freeing up additional cash that can be invested in future growth as the housing market rebounds. Once our balance sheet is right-sized, Atrium will be more competitive than ever.”

He continued, “Importantly, we already have the support of an overwhelming number of our senior secured lenders, so we expect to be able to move through the court process relatively quickly and efficiently. Additionally, the support of Kenner & Company and Golden Gate, and their investment, is evidence of Atrium’s bright future. In the meantime, as an industry leader, we look forward to continuing to deliver the same exceptional quality, value and service that have been a hallmark of Atrium and our brands for years.”
As noted above, the Plan contemplates an equity investment from Kenner and Company and Golden Gate Capital of $125 million in return for the equity of the reorganized Company, as well as a refinancing of the senior secured debt. To the extent the Kenner investment or some other comparable new equity investment is not completed under the terms set forth in the Plan, the Plan contemplates that the senior secured lenders’ claims will be satisfied through the issuance of new secured loans and conversion of existing debt to equity in the reorganized Company. The Plan provides for Atrium’s current management team to remain in place under either scenario.

More than two-thirds of the Company’s senior secured lenders have signed an agreement supporting the Plan. In addition, the Company noted that its senior secured lenders hold a majority of the Company’s outstanding unsecured notes.

Additional information on Atrium’s balance sheet restructuring is available on the company’s website at www.atrium.com/restructuring .

The Company’s legal advisors are Kirkland & Ellis in the U.S. and Goodmans LLP in Canada. Moelis & Company is serving as financial advisor.