(Bloomberg) -- Recycled glass supplier Strategic Materials Inc. has filed for bankruptcy after being squeezed by higher interest rates and increased competition. 

The Houston-based company, which is backed by private equity firm Littlejohn & Co., has around $433 million of funded debt liabilities, according to court papers. During the restructuring, the company said it plans to operate without disruption. 

Strategic Materials’ funded debt became “significantly more expensive” following the rapid increase in central bank interest rates, squeezing liquidity, Chief Financial Officer Paul Garris said in a court filing. At the same time, new entrants to the market and post-pandemic shifts in consumer habits have challenged company operations.

Under the restructuring plan, the company will be handed over to certain creditors in a debt-for-equity swap which will see the balance sheet delevered by over $300 million. The decision to file for Chapter 11 followed a failed out-of-court sales process. 

Existing lenders plan to provide $23 million to allow Strategic Materials to continue to meet obligations while restructuring the business, subject to court approval. 

“We play a critical role for the customers and communities we serve,” Chief Executive Officer Chris Dods said in a statement. “The past several years presented significant operational and financial challenges, requiring a comprehensive restructuring of the balance sheet.”

The company noted that its Canadian and Mexican based operating affiliates are not part of the Chapter 11 bankruptcy process.

The case is Strategic Materials Inc, 23-90907, US Bankruptcy Court for the Southern District of Texas (Houston). 

©2023 Bloomberg L.P.