Dura amends plan to tweak terms of new convertible preferred stock

By Caroline Salls

Pittsburgh, April 1 - Dura Automotive Systems, Inc. filed an amended version of its revised plan of reorganization and related disclosure statement Monday with the U.S. Bankruptcy Court for the District of Delaware.

The hearing on approval of the disclosure statement is scheduled for April 3.

Under the amended plan, the terms of the $225 million in new convertible preferred stock to be issued to second-lien claimants will include a liquidation preference equal to the second-lien loan and a 20% annual dividend that will accrue and increase the liquidation preference of the shares, instead of the 20% pay-in-kind dividend under the original revised plan.

Shareholders can convert their shares into 92.5% of the company's new common stock beginning on the third anniversary of the plan effective date, and thereafter into new common stock based on a percentage of any accrued dividends earned since the third anniversary though the conversion date.

Beginning on the fourth anniversary of the plan effective date, the holders of the new common stock can call the conversion of all outstanding convertible preferred stock, provided, however, that the convertible preferred stock is trading at 115% or more of the liquidation preference or the number of shares of new common stock the preferred stock is convertible into is trading at the same level.

Any time before the third anniversary of the plan effective date, reorganized Dura can redeem up to 100% of the convertible preferred stock, plus any dividends then outstanding. However, preferred stockholders can convert 7% of their shares into new common stock on the first anniversary, 14% on the second anniversary and 21% on the third anniversary.

As previously reported, Dura filed a new plan of reorganization on March 7 after the company put its original reorganization plan on hold because of exit financing delays brought on by unfavorable market conditions.

Dura said its official committee of unsecured creditors and an informal committee of second-lien debtholders have agreed in principle to support the new plan. If the plan does not take effect by Aug. 31, it will become null and void.

Holders of senior notes and other general unsecured claims will receive 100% of the new common stock in the reorganized company, with senior noteholders to receive 95% of the new common stock and the other unsecured creditors to receive 5%.

Holders of the company's pre-bankruptcy subordinated notes, convertible preferred securities and existing equity will receive no distribution under the plan.

Funding for the revised plan will include a committed $80 million second-lien loan facility to be provided by some of Dura's creditors, in addition to an exit facility that will include a $150 million first-lien term loan and a $110 million revolving credit facility.

Plan creditor treatment

Treatment of creditors under the plan will include:

• Holders of administrative expense claims, DIP facility claims and other priority claims will recover 100% in cash;

• Holders of other secured claims will receive either full payment in cash or return of the collateral securing the claim;

• Holders of second-lien claims will receive payment in full through the second-lien convertible preferred stock distribution;

• Holders of senior notes claims will receive a share of a common stock distribution;

• Holders of subordinated notes claims, convertible subordinated debentures, subordinated claims and equity interests will receive no distribution under the plan; and

• Holders of other U.S. general unsecured claims will receive a share of an unsecured creditor equity distribution, and holders of Canadian other general unsecured claims will receive a share of a Canadian creditor distribution.

Dura, a Rochester Hills, Mich.-based automotive parts maker, filed for bankruptcy on Oct. 30, 2006. Its Chapter 11 case number is 06-11202.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.