Remy exits bankruptcy with $330 million in exit financing

By Caroline Salls

Pittsburgh, Dec. 6 - Remy International, Inc. emerged from Chapter 11 bankruptcy when its pre-packaged plan of reorganization took effect Thursday, according to a company news release.

As previously reported, the plan was confirmed by the U.S. Bankruptcy Court for the District of Delaware.

In conjunction with the bankruptcy exit, Remy said it has access to its $330 million in exit financing, including a $120 million revolving credit facility and term loans of $210 million.

Specifically, the facility includes a $120 million five-year asset-based revolver, a $160 million six-year first-lien term loan and a $50 million 61/2-year second-lien term loan.

The company said the exit financing will provide it with the liquidity required to continue to meet its financial needs and operate its business in the coming years.

The company's debtor-in-possession facility was converted into the exit facility.

Interest on the revolver will be Libor plus 200 basis points.

After three months from closing, interest on the revolver will be based on borrowing availability. If availability is more than $85 million, interest will be Libor plus 175 bps; if availability is $40 million to $85 million, interest will be Libor plus 200 bps; and if availability is less than $40 million, interest will be Libor plus 225 bps.

Interest on the first-lien term loan is Libor plus 450 bps.

"Today marks the start of a new chapter in Remy's history," president and chief executive officer John Weber said in the release.

"In reaching this milestone Remy has effectively restructured its debt and its commercial arrangements with General Motors and as a result, strengthened its competitive position."

In addition, Remy said the sale of its M&M Knopf Auto Parts subsidiary closed on Tuesday.

Under the pre-packaged plan, the company will repay its second-priority senior secured floating-rate notes in full, raise $85 million in preferred equity through a rights offering, exchange its existing 8 5/8% senior notes for $100 million of new third-lien pay-in-kind notes and $45 million in cash, convert its 9 3/8% senior subordinated notes and 11% senior subordinated notes into 100% of the common equity of the reorganized company and cancel all of its existing equity interests.

Plan creditor treatment

Specific treatment of creditors under the plan will include:

• Holders of administrative claims, priority tax claims, any secured credit agreement claims, $125 million in floating-rate secured notes claims and DIP claims will recover 100% in cash;

• Other secured claims and general unsecured claims will be reinstated;

• Other priority claims will be paid in full in the ordinary course of business;

• Holders of $145 million in senior notes claims will receive a share of senior notes rights to acquire up to 25,000 shares of new common stock, $100 million in new third-lien notes, cash and up to 2,000 shares of preferred stock;

• Holders of subordinated note claims will recover 36% in 100% of the new common stock in the reorganized company and rights to acquire up to 60,000 shares of new preferred stock;

• Holders of subordinated securities and equity interests will receive no distribution under the plan.

The new third-lien notes will have a seven-year term and will bear interest at Libor plus 950 bps if paid in cash or Libor plus 1,200 bps if paid in kind.

Remy, an Anderson, Ind.-based manufacturer, remanufacturer and distributor of Delco Remy brand heavy-duty starters and alternators and Remy brand starters and alternators, locomotive products and hybrid power technology, filed for bankruptcy on Oct. 8. Its Chapter 11 case number is 07-11481.

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