Bankruptcy: Chassix says reorg still ‘on pace’ despite flak from creditor panel

Ahead of its hearing on the adequacy of its disclosure statement scheduled for tomorrow, Chassix confirmed that it “remains on pace to emerge from Chapter 11 on the same time frame as when [it] commenced these cases,” despite the filing of objections last week to its disclosure statement from the official unsecured creditors’ committee in the case and the U.S. Trustee for the bankruptcy court in Manhattan.

That time frame would see the company emerge from Chapter 11 by the end of July.

In that regard, it is worth noting that according to an amended disclosure statement filed yesterday, the company is seeking to schedule a confirmation hearing on June 30, and set a deadline for an effective plan date of July 31. That schedule represents only a slight delay from the company’s initial time frame, which sought a confirmation hearing on June 18 and set an emergence deadline of July 17.

As reported, Chassix filed for Chapter 11 on March 12, saying that it had reached agreement on a “comprehensive restructuring and recapitalization of the company” supported by 71.5% of its senior secured bondholders, 80% of its unsecured bondholders, its existing equity sponsor Platinum Equity, and all of its largest customers (including Ford, GM, FCA f/k/a Chrysler, Nissan, and BMW).

The proposed restructuring would convert roughly $375 million of the company’s senior secured notes into 97.5% of the reorganized company’s equity (subject to dilution), while holders of $158 million of the company’s unsecured notes would receive 2.5% of the new equity (subject to dilution) and warrants to purchase an additional 5%. The company’s customers, meanwhile, would provide, among other things, a “long-term accommodation” that includes about $45 million in annual price increases, and new business and programs, as well as waiving certain reorganization plan distributions, agreements that the company said were “central to the plan.”

Last week, however, the unsecured creditors’ panel filed an objection to the proposed disclosure statement, saying it had “significant concerns regarding the plan’s potentially inadequate allocation of value to unsecured creditors.”

Rather that filing a full-throated objection to the disclosure statement, however, the committee asked the company to include a letter with the disclosure statement setting out its concerns, adding that it “cannot, at this time, recommend that creditors vote in favor of, or against, the plan,” and recommending that “prior to voting on the plan, each unsecured creditor carefully review the materials provided to them, including, and especially,” the committee’s letter.

The company agreed to include the letter in the disclosure statement.

More specifically, the panel’s concerns are with the company’s enterprise and distributable valuations ($450-550 million, with a midpoint of $500 million, and range of $280-380 million, respectively), which are below the amount of secured claims and therefore, as a liquidation matter, would leave no recovery for unsecured creditors. That said, the reorganization plan does allocate 2.5% of the reorganized equity to unsecured noteholders, and $1 million in cash for general unsecured claims, with the potential for an additional $6 million for certain trade claims.

Among other things, the committee said it had concerns with the company’s valuation methodologies, financial projections, valuations of potential avoidance actions, and the claims placed in the unsecured claims pool.

The committee said it was currently investigating potential causes of action against the company’s equity sponsor, Platinum Equity, for fraudulent conveyance, breach of fiduciary duty, intentional fraud, gross negligence, and willful misconduct relating to the issuance of the company’s unsecured notes and the use of the proceeds of those notes to fund a $100 million special dividend to Platinum.

“The committee believes that at the time that the special dividend was paid, the debtors’ directors were aware, or should have been aware, of the debtors’ contractual commitments (some of which had been entered into many years prior) that would ultimately contribute to the debtors’ operational and financial difficulties in 2014.”

According to the first-day declaration filed in the case by Chassix president and CEO, J. Mark Allen, the company’s financial difficulties were precipitated by a “severe liquidity crisis” in November, 2014, arising from a “perfect storm of events,” which he described as “underpriced contracts and programs, compounded by a marked spike in the demand for automobile production in North America at a time when there was limited capacity in the machining and casting sectors.” Those circumstances, Allen said, “overwhelmed the debtors’ manufacturing facilities and capabilities,” and eventually “resulted in an onslaught of quality issues and missed release dates that significantly increased the debtors’ costs of manufacturing.”

Allen’s declaration further said, “[b]y the fourth quarter of 2014, these operational issues – which had snowballed at a rate that neither the debtors, their customers, nor any of their other constituents had anticipated – had severely impacted the debtors’ cash flows and erased any operating profit they had hoped to achieve due to the increase in production demand.”

The company has argued that any potential recoveries from claims against Platinum would not be “meaningful,” and while the proposed plan does include a purported “global settlement” of potential claims against Platinum under which the equity sponsor agreed, in exchange for full releases, “to take, or not to take, certain actions that could impact the tax attributes” of the reorganized company, the creditors’ committee called this contribution “negligible,” saying it needed to independently investigate the potential claims.

In addition, the committee also raised concerns about the procedure for creditors to consent to third party releases contained in the plan, saying the process set a death trap for creditors under which they are forced to consent to the third party releases in order to accept the plan. A subsequent objection from the U.S. Trustee for the Manhattan bankruptcy court raised a similar issue.

The company, however, responded that its process was consistent with the law. – Alan Zimmerman


Restructuring: American Eagle Energy nets forbearance after missing first coupon

American Eagle Energy has entered into a forbearance agreement to negotiate the terms for a restructuring of its balance sheet after the Colorado-based exploration-and-production operator failed to make the first coupon payment on its $175 million of 11% first-lien notes due 2019 issued in August last year.

Lenders to American Eagle Energy have agreed not to call defaults on the missed $9.8 million coupon payment due March 1 after the company made a partial interest payment of $4 million, leaving $5.8 million unpaid.

The agreement, which was put in place by four holder who collectively own more than 50% of the notes, gives American Eagle Energy until May 15 to assess its liquidity situation regarding the remaining partial interest payment, or to “negotiate and effectuate a restructuring,” the company said in a statement on Tuesday.

As part of the forbearance, the energy concern is required to retain a restructuring advisor, a temporary chief financial officer, consultant, financial advisor and/or other third-party professional no later than April 10.

SunTrust Bank, meanwhile, said it has given notice of its resignation as control agent under the agreement.

As reported, American Eagle Energy last month skipped the first coupon payment due on a $175 million issue of 11% first-lien notes due 2019 and the company entered into the typical 30-day grace as it seeks to explore “options to strengthen its balance sheet.

American Eagle debuted in market less than seven months ago with the first-lien notes via GMP Securities, and proceeds were used to refinance an existing credit facility and fund general corporate purposes. As reported, co-managers included Canaccord Genuity, Global Hunter, and Johnson Rice. A “long first coupon” due March 1 includes extra interest due prior to Sept. 1, 2014, as settlement was Aug. 27.

Issuance was 99.06 at offer, to yield 11.25%, which was wide of the 11%-area guidance. The debt edged higher on the break, but soon succumbed to the bear market in the oil patch. Indeed, valuation moved to the 50 context after the OPEC bombshell over Thanksgiving, from the high 80s earlier in autumn, and market quotes were recently quoted in the low 30s, according to sources. The bonds last traded in the 32 context in mid-March from the low 40s around the time of the default.

Ratings were CCC/Caa1 at issuance, but have since been lowered to D, from CCC+, by S&P, and Ca by Moody’s.

Denver, Colo.-based American Eagle Energy is an independent exploration-and-production operator focused on the Bakken and Three Forks shale-oil formations in the Williston Basin of North Dakota and Montana. The company trades on the NYSE under the symbol AMZG, with an approximate market capitalization of $5.5 million, down from $180 million at the time of bond issuance in August. –  Staff reports


US Trustee names New York lawyer Richard Davis as Caesars examiner

The U.S. Trustee for the bankruptcy court in Chicago has named Richard J. Davis as the examiner in the Chapter 11 case of Caesars Entertainment Operating Co., court filings show.

The appointment is subject to approval by the bankruptcy court in Chicago that is overseeing CEOC’s Chapter 11.

As reported, the Chicago bankruptcy court on March 12 ordered the U.S. Trustee to appoint the examiner. In a setback for the company, the bankruptcy court appeared to set a wide scope for the contemplated investigation, and did not set specific limits on either the cost or length of the investigation, both of which were sought by the company (see “Caesars’ examiner probe to have broad scope, judge rules,” LCD, March 12, 2015 $).

The order does require the examiner to submit an interim report every 45 days, and to file a final report within 60 days of completing his investigation.

According to materials submitted to the bankruptcy court, Davis, 68, is in individual practice in New York City. From 1981 to 2012, he was a litigation partner at Weil, Gotshal & Manges, and from 1977 to 1981, during the administration of President Jimmy Carter, he was an Assistant Secretary of the Treasury for Enforcement and Operations.

Going back even further, Davis was a special prosecutor for the Watergate Special Prosecution Force, including serving as chief trial counsel in the trails of Dwight Chapin, an advisor to President Nixon, and Edward Reinecke, a former Lieutenant Governor of California. Both were convicted of perjury; Chapin served nine months in prison, while Reinecke, sentenced to 18 months, saw his conviction overturned on appeal.

A hearing on the U.S. Trustee’s emergency motion to name Davis as the examiner is scheduled for tomorrow. – Alan Zimmerman


Bankruptcy: Global Geophysical nets reorganization plan confirmation

The bankruptcy court overseeing the Chapter 11 proceedings of Global Geophysical Services on Feb. 6 confirmed the company’s reorganization plan, according to a court order entered in the case.

As reported, the company rescheduled its plan-confirmation hearing for Friday after coming to terms on $120 million in exit financing. The hearing had been adjourned to a “date to be determined” on Dec. 19, 2014.

As reported, the exit facility was less than the $150 million contemplated under the company’s proposed reorganization plan. In disclosing the terms of the financing last week to the bankruptcy court in Corpus Christie, Texas, the company also disclosed that its DIP lenders had as a result agreed to “less favorable treatment” than spelled out in the plan.

The exit facility is comprised of a $60 million first-lien term loan, a $25 million first-lien revolver, and a $35 million pay-in-kind second-lien facility (see “Global Geophysical nets exit loan of only $120M; DIP recovery nicked,” LCD, Feb. 3, 2015).

Under the less-favorable treatment agreed to by DIP lenders, holders of the DIP A term loan will receive 99% of their aggregate claims in cash, and 1% in the form of new second-lien exit debt (compared to all cash under the proposed reorganization plan), while holders of the DIP B term loan will now receive second-lien debt (compared to cash under the proposed reorganization plan) after converting $51.9-68.1 million of their claim to equity in the reorganized company, which amount will be reduced on a pro rata basis from the proceeds of a rights offering, the amount of which will correspond to the amount of the DIP that is converted to equity.

As reported, the company’s DIP facility was comprised of an initial $60 million A term loan and an additional $91.88 million B term loan that was subsequently added to resolve a battle over the DIP, with the proceeds of the B term loan going to pay off the company’s pre-petition secured lender claims (see “Global Geophysical nets court approval of upsized $151.8M DIP loan,” LCD, April 25, 2014).

The lenders under the DIP are a group of holders of the company’s 10.5% notes due 2017.

Shares under the rights offering would be offered to certain senior noteholders (those qualified as accredited investors) at $8.0887 per share, representing a 15% discount to the per share equity value based on an enterprise value of $190 million. At the maximum conversion amount, the shares (about 3.47 million) would represent 37.41% of the reorganized company, while at the minimum conversion level (about 2.85 million shares) they would represent 28.5%.

The ultimate conversion/rights offering amount would depend upon a formula tied to the company’s cash balance as of Dec. 31, with the maximum conversion amount occurring of the cash balance is less than negative $11.3 million, and the minimum conversion amount occurring of the company’s cash balance exceeds $5 million.

The company’s base case assumes a projected cash balance of negative $6 million, with 34.53% of the shares represented in the conversion amount.

Beyond participation in the rights offering, senior noteholders, with allowed claims of roughly $262.87 million, are also slated to receive a pro rata share of equity in the reorganized company ranging from 11.95-32.71%.

The projected recoveries for those noteholders eligible to participate in the rights offering range from 6.89-13.85%, while the projected recoveries for note holders not eligible for the rights offering are slightly less, or 5.01-12.65% (see “Global Geophysical reorg plan puts enterprise value at $190M,” LCD, Sept. 24, 2014). – Alan Zimmerman


Joe’s Jeans Defaults on $60M Leveraged Loan; Interest Rises to 14%

Joe’s Jeans defaulted on a $60 million term loan and will begin paying default interest of 14%, instead of 12%.

Garrison Loan Agency Service is the agent. The default, on Nov. 6, stems from the company failing to meet the minimum-EBITDA covenant for the 12 months ended Sept. 30.

As a result of the term loan default, the company defaulted on a revolving credit agreement and a factoring facility with CIT Commercial Services. The company owes $33.9 million under the RC, and has availability of $13.7 million, including the factoring facility, as of Sept. 30.

Management is in talks with Garrison and CIT over amendments and default waivers. Without a waiver, lenders could accelerate repayment, possibly triggering a bankruptcy, an SEC filing today said.

In the nine months ended Aug. 31, the company generated net income of $276 million, versus a net loss of $287 million in the same period a year earlier.

In September 2013, CIT Capital Markets and Garrison Investment Group provided $110 million in debt financing to Joe’s Jeans to back the $97.6 million acquisition of Hudson Clothing from Fireman Capital Partners, Webster Capital, and management.

The financing includes a $60 million, five-year term loan and an up to $50 million, five-year borrowing-based revolver. At syndication, the bulk of the RC was priced at L+250, while a $1 million RC-1 sliver was priced at L+350. The RC is subject to a 50 bps call in year two if Joe’s Jeans terminates the RC commitment.

At syndication the five-year term loan was priced at L+1,075 and callable at 103, 102, and 101, according to the filing. The loan is subject to fixed-charge and leverage ratios, and an EBITDA minimum.

In addition to the acquisition, proceeds funded fees and expenses, working capital and general corporate purposes. Joe’s Jeans also issued $32.4 million of convertible notes to the sellers as part of the deal.

Los Angeles-based Joe’s Jeans designs, sources and distributes branded apparel products to over 1,200 retail locations in the U.S. and abroad. The company’s shares trade on the Nasdaq under the ticker JOEZ. – Abby Latour

Follow Abby on Twitter @abbynyhk for middle-market deals, leveraged M&A, distressed debt, private equity, and more


Bankruptcy: Exide nets OK for its amended DIP at the cost of plan exclusivity

The bankruptcy court overseeing the Chapter 11 proceedings of Exide Technologies has approved an amended DIP facility for the company, but only on the condition that the company’s exclusivity period to file a reorganization plan be terminated.

In doing so, Bankruptcy Court Judge Kevin Carey practically dared the unsecured creditors’ committee in the case, which had objected to the amended DIP on the grounds that more favorable financing was available for the company, to file a competing reorganization plan.

“The committee can stop telling me there is something better,” Carey said, “and start showing me.”

Exclusivity had been set to expire on Dec. 10. It will now expire on Nov. 6, with Carey giving the company and its DIP lenders several days to gather the approvals necessary to further amend the facility so that the termination of exclusivity does not cause a default.

As reported, the unsecured creditors’ committee in the case had argued that the narrow milestone deadlines of the amended DIP were designed to ease the way for DIP lenders, many of which are also prepetition noteholders, to credit bid their claims to acquire the company’s most valuable assets by eliminating the potential for competing third-party bids.

Under the amended DIP, the facility would be extended through March 15, 2015, an extension the company said it needed because of several setbacks to its reorganization that occurred this summer. In connection with that maturity extension, the company set Nov. 17 as the deadline for it to enter into a reorganization plan support agreement with creditors, saying that if it failed to do so it would pursue a sale of the company.

The milestone deadlines associated with the sale option would require a signed stalking-horse agreement by Dec. 23, bankruptcy court approval of bid procedures by Jan. 15, 2015, and bankruptcy court approval of a sale by March 10, 2015.

That timeline, the unsecured creditor panel said, was too tight for a potential buyer to formulate a bid and perform due diligence on a company the size and complexity of Exide.

In arguing that the amended DIP was designed to benefit pre-petition noteholders, the creditors’ committee said the company had made “little or no effort” to pursue alternative DIP funding, despite the committee’s financial advisor providing the company with names of several potential alternative lenders.

At a hearing on the extended DIP this morning in Wilmington, Del., some of the potential alternative lenders were identified as Jefferies, Cerberus, PIMCO, and Black Rock. While all parties agreed that talks with those lenders did not advance too far, the creditors’ committee argued that was due to the company’s stalling tactics.

For its part, the company said that its current lender, JPMorgan Chase, was the only firm to actually provide it with a funding commitment, and in any event, any alternative DIP financing would have triggered a priming fight with prepetition noteholders. The company also argued that the most promising alternative offer, from Jefferies, was priced higher than the amended DIP, although the creditors’ committee countered that the pricing of the Jefferies offer was balanced with other, more favorable terms, including a longer maturity extension of one year and an extended, more realistic sale timeline.

Beyond the battle over the company’s negotiation of its DIP facility, the company’s key stakeholders disagreed over the company’s prospects for a reorganization plan as opposed to a sale process.

An attorney for an unofficial ad hoc committee of noteholders, for example, denied that the group’s objective was to position itself for a credit bid. “The UNC’s primary objective is a reorganization plan,” the attorney told Carey, adding that the group was involved in active negotiations with the company.

But lawyers for the official unsecured creditors’ committee said no such negotiations were taking place. “If there is a plan process going on,” the lawyer said, “it doesn’t include us.”

Against this backdrop, Carey approved the amended DIP based on a finding that the company had clearly met its burden under the Bankruptcy Code and business judgment rule for approval of the facility, but he added that the case itself “had reached a mile post” at which “the court must make a decision” on the process from this point forward.

“Fairness requires” that exclusivity be terminated, Carey said, so that the creditors’ committee, “if it wishes, can put its money where its mouth is.” – Alan Zimmerman


Exide lambastes cred panel’s ‘incoherent accusations’ about DIP

Exide Technologies lambasted the unsecured creditors’ committee acting in its Chapter 11 proceedings, accusing the panel in a bankruptcy court filing of “playing a dangerous blame game in an attempt to substitute its own agenda for the debtor’s business judgment.”

The focus of the company’s ire is the committee’s objection to approval of proposed amendment to Exide’s DIP facility, and the committee’s request that the bankruptcy court order a 30-day process for the company to consider alternative DIP financing proposals.

As reported, the committee’s primary objection to the proposed amended DIP is that the facility’s allegedly tight milestone deadlines are designed to enable the company’s DIP lenders, many of which are also pre-petition noteholders, to credit bid the company’s most valuable asset, its equity interest in its international subsidiaries. Among other things, the committee alleged that the company refused to give other lenders identified by the committee a fair shot at providing an alternative DIP facility on less restrictive terms (see “Exide panel slams amended DIP; wants alternate financing considered,” LCD, Oct. 24, 2014).

The company’s defense of its proposed amended DIP and its reorganization process, of course, is to be expected, but the attack on and mockery of the unsecured creditors’ committee in the company’s Oct. 28 response to the panel’s objection, while perhaps simply a matter of style, is nonetheless notable given the typical practiced blandness and formality of legal prose.

The company accused the committee of attacking the amended DIP “with guns blazing,” of filing an objection “littered with haphazard barbs,” of expressing “righteous conviction” in its assertion of a “nefarious” scheme, of leveling “incoherent accusations,” of pushing a “conspiracy theory,” and of “casting aspersion” on the company and its professionals, the unofficial noteholder committee, and the company’s DIP lenders “for their alleged master plan to force milestones on the debtor that will result in a credit bid sale in which they will steal the company from junior creditors.”

“The committee’s scorched-earth litigation challenge to the DIP financing is reckless brinkmanship by a desperate constituent acting like it has nothing to lose,” the company said, adding, “It is no secret that the committee fundamentally disagrees with the debtor and senior creditors regarding the trajectory of this case.”

More specifically, the company charges, “The committee seems to disagree with the debtor’s decision to engage with the [unofficial noteholder committee] regarding strategic options.” However, the company continues, “Given that the UNC member’s consent would be required if their claims are to be equitized and they have consistently been the most likely source for investment in any reorganized entity, this group obviously represents the ‘fulcrum’ security here, no matter how much the committee wishes the facts were otherwise.”

Lastly, the company notes, its exclusivity period is slated to expire on Dec. 10. “The committee can then put its money where its mouth is, if it so desires.”

As reported, the unsecured creditors’ committee support for the company has waxed and waned over the course of the case.

On June 17, for example, in response to a motion from the company to extend its exclusivity periods, the creditors’ committee said it had “genuine concerns regarding the [company’s] process in formulating and developing a plan,” adding, “To date, the debtor has not engaged the committee with respect to the plan.”

And on June 30, after the company unveiled the terms of a proposed reorganization plan supported by noteholders – calling it “highly constructive” and its “likely path… to emerge from Chapter 11” – the creditor panel responded that the company had, up to that point, “refused to negotiate with the [creditors’] committee, or, for that matter, any party other than the [noteholders’ committee] in connection with the structure of a plan of reorganization and an exit strategy.” Further, the committee said, the company had “also shunned the [creditors’] committee’s efforts to open the plan process to third parties.”

But on July 31, the company said in a court filing that it had begun negotiations with the official unsecured creditors’ committee, stating that it and the noteholders’ panel had exchanged term sheets with the creditors’ committee and “conducted several in-person meetings among the professionals in an effort to achieve a consensual plan construct.” The company said that the creditors’ committee was currently “evaluating the latest plan proposal and is expected to provide feedback.”

More recently, when the company announced its dual-track approach to a reorganization on Sept. 30, it said it was working toward a “modified proposal that would pay or refinance the existing DIP facility and provide additional capital to fund its reorganization,” adding that it was hopeful that it would reach agreement on a term sheet for a reorganization plan supported by the official creditors’ committee “in the near term.”

Since then, however, the spirit of cooperation appears to have gone south. Last week, the committee filed a motion to compel the company and the unsecured noteholder committee to produce documents in response to discovery requests. That dispute is slated to be heard tomorrow (see “Exide discovery spat with panel may portend bigger fights ahead,” LCD, Oct. 22, 2014).

The discovery spat proved to be a harbinger of the committee’s objection to the amended DIP, filed the next day. A hearing on that is scheduled for Oct. 31. – Alan Zimmerman


Harbinger’s amended LightSquared plan details new DIP, exit funding

lightsquared logo

Harbinger Capital has filed an amended reorganization plan for LightSquared Inc. detailing, among other things, the plan’s proposed $460 million in new DIP financing and the proposed $360 million of exit financing that is slated to ultimately replace the new DIP.

The amended plan also disclosed financing commitments for both facilities from Harbinger and JPMorgan Chase.

In its Sept. 11 filing, Harbinger also filed a plan support agreement with the Manhattan bankruptcy court indicating that MAST Capital, the holder of LightSquared Inc.’s prepetition secured debt, had formally signed onto the Harbinger plan.

As reported, the Harbinger plan would reorganize LightSquared Inc. separately from its unit, LightSquared LP. The limited partnership unit has roughly $2 billion of first-lien secured debt, including accrued but unpaid interest outstanding, and is the operating unit that LightSquared was using to build its wireless network. This is also the LightSquared LP debt that was acquired by Charles Ergen, founder and CEO of LightSquared competitor DISH Networks that has resulted in a significant amount of litigation and dissension in the case (see “LightSquared aims for Oct. 20 confirmation hearing amid deep divides,” LCD, Aug. 12, 2014).

The Harbinger plan for LightSquared Inc., which in addition to LightSquared LP controls several other communications companies, most notably Reston, Va.-based One Dot Six, calls for Harbinger and JPMorgan to fund by Oct. 31 a replacement DIP for the company via a $160 million senior DIP and a $300 million junior DIP. The proceeds of the new DIP would be used to repay the company’s existing DIP facility, which would be allowed in the amount of $109.28 million, and about $131.128 million of the company’s prepetition secured credit agreement debt, which would be allowed in a total amount of $331.128 million.

The remaining $200 million of the prepetition secured claim – which as noted above is held by MAST Capital – would be purchased on a dollar-for-dollar basis by JPMorgan and converted into a like-sized portion of the junior DIP, with the end result being that MAST’s claim would be paid in full, in cash.

The remaining funding for the junior DIP would consist of $100 million of new money to be provided by Harbinger. Interest under the junior DIP would be at L+200 with a 1% LIBOR floor.

Upon emergence from Chapter 11, the senior DIP facility would convert into a $160 million, four-year term facility with One Dot Six as the borrower, again at L+1,100 with a 1% LIBOR floor, according to the filing.

As for the junior DIP, the $200 million portion provided by JPMorgan via the purchase/conversion of the prepetition debt would be replaced by a new $200 million exit facility at reorganized LightSquared Inc., the terms of which were not provided in the filing.

In exchange for its portion of the junior DIP claim, meanwhile, Harbinger would receive, among other things, new One Dot Six preferred shares having an original stated principal value of $175 million and 70% of the reorganized One Dot Six common shares.

JPMorgan would also receive, in exchange for the prepetition preferred shares of LightSquared Inc., held by its affiliate, SIG Holdings, 100% of the equity in reorganized LightSquared Inc. Among other things, the reorganized LightSquared Inc., would hold, once all of the reorganization transactions were complete, One Dot Six preferred shares having an original stated principal value of $160 million and 30% of the reorganized One Dot Six common shares.

Last, but not least, the final piece of the reorganized capital structure would be a $40 million, five-year second-lien exit facility to issued by reorganized LightSquared Inc. to reorganized One Dot Six, priced at L+200, with a 1% LIBOR floor.

It should be noted that the Harbinger plan is contingent on, among other things, the LightSquared LP lenders being paid in full under the previously reported reorganization plan filed by LightSquared, or, alternatively, a judicial ruling that they do not hold a claim against LightSquared Inc., arising out of the parent company’s guarantee of the limited partnership’s credit agreement. That determination will depend, in part, on the results of what will likely be a contested valuation of the LP company, since a significant portion of the LightSquared LP lender recovery is in the form of equity.

As reported, the company’s confirmation hearing is scheduled for Oct. 31, with a confirmation date of Oct. 31 contemplated under the current schedule. – Alan Zimmerman



Trump Taj Mahal could file Chapter 11 ‘within days’ – report

trumptajTrump Entertainment Resorts last remaining casino, Trump Taj Mahal, could be headed to Chapter 11, according to a report yesterday afternoon in the New York Post.

According to the report, which cites anonymous sources, the company recently violated some of its loan covenants, and negotiations with lenders have not produced a restructuring solution. The report said that the company had hoped that Carl Icahn, who holds a significant chunk of the debt, would agree to a debt-for-equity exchange, but hopes for that “have faded.”

The Post said the filing could come “within days.”

Meanwhile, online news site reported that the Taj Mahal said in a financial filing on Aug. 22 that it could run out of cash needed to pay its bills, and it needed to either find additional borrowings or restructure its existing debt. The report did not specifically identify the filing or provide further details.

As reported, Trump Entertainment Resorts exited Chapter 11 for the third time on July 16, 2010, with Avenue Capital as the company’s largest shareholder (see “Trump Entertainment exits Ch. 11; no A/C in Atlantic City,” LCD, July 16, 2010). The reorganization featured, among other things, a $225 million rights offering backstopped by second-lien lenders, and led by Avenue, to fund distributions under the plan. The company’s first-lien lenders at the time, Beal Bank and Icahn, received a combination of cash proceeds and new secured debt, after the court rejected their rival plan proposal that would have exchanged their first-lien debt for equity.

Several months after its emergence, the company sold its Trump Marina Hotel Casino for $38 million (see “Trump Entertainment in pact to sell Trump Marina for $38M,” LCD, Feb. 15, 2011) leaving it with the Taj and the Trump Plaza.

The Trump Plaza is slated to close down on Sept. 16.

The news, if true, is just the latest blow to Atlantic City, which has seen numerous casinos close down recently. – Alan Zimmerman


Bankruptcy: Exide nets plan exclusivity extension through Dec. 10

The bankruptcy court overseeing the Chapter 11 proceedings of Exide Technologies extended the exclusive period during which only the company could file a reorganization plan through Dec. 10, according to a court order entered on Friday.

The corresponding exclusive period for the company to solicit votes to a plan was also extended, to Feb. 10, 2015, the order states.

As reported, the company filed its motion seeking the exclusivity extensions on July 31, saying it needed the additional time “to allow on-going negotiation of a confirmable plan of reorganization and to garner maximum consensus around that plan.” (See “Exide seeks to extend exclusivity as plan, exit loan talks heat up,” LCD, Aug. 4, 2014).

A hearing on the motion was scheduled for Sept. 3, but the court issued its order prior to the hearing since there were no objections filed to the requested extension, court filings show. – Alan Zimmerman