RathGibson disclosure statement approved; plan hearing set for Oct. 9

By Alice Popovici

New York, Aug. 31 - RathGibson Inc.'s disclosure statement for its plan of reorganization was approved Monday, according to a filing with the U.S. Bankruptcy Court for the District of Delaware.

A plan confirmation hearing has been scheduled for Oct. 9.

As previously reported, RathGibson's proposed plan has the support of its pre-bankruptcy secured lender and key senior noteholders.

The company said the plan will significantly reduce its debt burden.

According to the disclosure statement, the company plans to issue 10 million share of new common stock. In addition, holders of senior note claims will be given the right to purchase new common stock under a backstopped rights offering.

Backstop equity investors will receive 7.5% of the new common stock.

RathGibson's senior notes will be converted into a majority of the reorganized company's post-bankruptcy equity, subject to dilution by new common stock to be issued to the debtor-in-possession facility lenders and new common stock to be issued under a rights offering and to rights offering backstop parties.

Creditor treatment will include:

• Holders of DIP facility claims will be paid in full in cash from the proceeds of an exit facility and/or rights offering, and these creditors will receive a share of DIP lender stock;

• Holders of administrative expense claims, priority tax claims, priority non-tax claims, general unsecured claims and other secured claims will be paid in full in cash;

• To the extend not already paid using DIP facility proceeds, holders of pre-bankruptcy secured credit agreement claims will be paid in full in cash;

• Holders of senior note claims will receive a share of 100% of the new common stock in the reorganized company, the right to participate in a rights offering and payment of ad hoc committee fee claims; and

• Holders of existing securities law claims and existing interests will receive no distribution.

RathGibson, a Lincolnshire, Ill.-based manufacturer of highly engineered stainless steel, nickel and titanium tubing, filed for bankruptcy on July 13. Its Chapter 11 case number is 09-12452.

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