By Gerri Elder
Businesses across the country continue to file or struggle with existing bankruptcy> cases. The latest, as reported by Bloomberg, are further revisions to the Chapter 11 bankruptcy reorganization plan for aluminum producer Almatis BV.
Almatis BV, a Europe-based raw materials company based in Frankfurt, Germany, has filed an agreement that it hopes will lead to an amicable end to its Chapter 11 bankruptcy reorganization, avoiding a long, drawn-out conflict with its various secured creditors.
Those that hold more than 66 percent of the company’s second-lien debt support the revised plan. These creditors include Babson Capital Management, Alcentra Group and Permira Advisers. The bankruptcy proceedings are being held in the U.S. Bankruptcy Court in New York, where a judge will decide to approve or reject this latest agreement.
The revised plan would pay first-lien creditors in cash, according to Bloomberg, and would include interest owed. Almatis BV owes $676 million to these creditors. Under the old plan, second-lien creditors would not have received very much compensation. Under the new plan, they would get just over $67 million in new senior unsecured notes. If those notes aren’t paid off in five years, these creditors will get warrants.
In the first plan, a group of senior secured creditors would have taken ownership in exchange for debt. That plan would have given between 78 and 87 percent recovery to senior lenders, where junior lenders would have recovered 2.2 percent. Junior lenders opposed this plan.
Almatis BV’s new Chapter 11 reorganization plan will be financed with, in part, $100 million from the owner, Dubai International Capital, according to Bloomberg. There will also be $50 million in revolving credit, more than 100 million Euros of secured notes and $400 million in senior secured notes.
Dubai International bought the company for $1.2 billion in 2007.
Various Almatis Group subsidiaries filed for bankruptcy protection in late April. The original plan was in place before filing, having already been negotiated with the senior lenders.
The group cited “rapid deterioration of the trading environment in early 2009” as a factor in its need to file for Chapter 11 bankruptcy in order to reduce its debt levels. At the time they said in a release that they hoped the agreement then in place would protect the company from the volatility of the marketplace and support future growth. The release also noted the hope for a reorganization process that would be “as short as possible,” noting the support of its senior lenders.
In the time since that release, the junior lenders made their voices heard, hence the new reorganization plan that meets more of their financial goals.
Almatis experienced a $1.5 million net loss in June 2010 against $17.8 million in revenue. Revenue for the company was $400 million in 2009, according to Bloomberg. The company started defaulting on loans to senior lender in June of that year.
The company listed $1.3 billion in total debt, with $681 million owed on first-lien debt, $77.7 million owed on second-lien debt and $200.6 million owed on mezzanine debt, plus even more debts lower down.
Their assets were listed as $1.53 billion.