International Wholesale Tile, Inc. and IWT Tesoro Corporation Chapter 11 Reorganization Notice to Employees

Summary

International Wholesale Tile, Inc. (IWT) and its parent company, IWT Tesoro Corporation, have announced to employees that they are filing for Chapter 11 bankruptcy protection to reorganize their business due to a downturn in the housing industry. The companies will continue normal operations, pay employees as usual, and maintain benefits. Bank of America will provide ongoing financing during the process, and KMA Capital Partners will assist with financial restructuring. The reorganization aims to secure the companies' future, with no impact on employee 401(k) accounts.

EX-10.54 3 a07-23530_1ex10d54.htm EX-10.54

Exhibit 10.54

September 7, 2007

To the employees of International Wholesale Tile, Inc.:

The housing industry has experienced a significant downturn over the past year, which is expected to continue for some time. This downturn resulted in International Wholesale Tile’s (IWT) management, and its parent company, IWT Tesoro Corporation (Tesoro), taking preemptive action in order to maintain its operations.

Tesoro’s and IWT’s Boards of Directors have decided to seek protection by filing a voluntary petition for reorganization under Chapter 11 of the United States Bankruptcy Code. The Boards believe this reorganization is in the best interest of the Tesoro and IWT, and their employees, customers, creditors, and shareholders. Tesoro’s CEO, Henry J. Boucher, Jr. has said, “After considering a wide range of alternatives, it became clear that this course of action was a necessary and responsible step to preserve Tesoro’s viability and longevity as we address our financial challenges and work to secure our future.”

As part of the reorganization, Tesoro’s and IWT’s primary lender, Bank of America, has agreed to continue to provide financing to Tesoro and IWT. The financing will include post-petition funds to acquire inventory, pay operating expenses and the costs of the Chapter 11 activities. We want to stress; Tesoro and IWT are NOT ceasing operations and expect to continue business as usual. In particular, IWT expects to:

· Continue normal business operations today and throughout the reorganization process

· Honor its customer service policies; ship and deliver orders as usual

· Pay its employees’ wages and salaries, offering the same medical, life insurance and other benefits and to accrue vacation and discretionary time without interruption.

Please be assured that all funds in your 401(k) account are not affected in any way by this filing.

During the reorganization process, Tesoro will be assisted in part by KMA Capital Partners. Tesoro, IWT and KMA Capital expect to co-sponsor a reorganization and refinancing plan so that we will continue to operate, assuming the Court certifies the plan. KMA Capital is an experienced merchant banking company with the same objectives of Tesoro’s management - to focus on restructuring IWT as a renewed leader in the industry, which you have come to expect from IWT. KMA Capital will be aiding us in the financial restructuring of the Company. During the interim period, KMA will also assist the company in its effort to increase the flow of product. Additionally, Tesoro and IWT are exploring other plans, as alternative possibilities.

We appreciate your support as we work our way through this reorganization process.

Sincerely,

Paul Boucher

International Wholesale Tile, Inc.

3500 SW 42nd Avenue

Palm City, FL 34990

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