Remy makes pre-packaged Chapter 11 filing

By Caroline Salls

Pittsburgh, Oct. 9 - Remy Worldwide Holdings, Inc. made its pre-packaged Chapter 11 bankruptcy filing Monday in the U.S. Bankruptcy Court for the District of Delaware after the holders of its 8 5/8% senior notes, 9 3/8% senior subordinated notes and 11% senior subordinated notes approved the plan.

Remy said it plans to emerge from bankruptcy within 60 days.

"Today's action enables us to efficiently restructure our debt and create a capital structure that will provide a foundation for future profitability," chief executive officer John Weber said in the release.

"Over the last several months, we have worked closely with our stakeholders to develop and now implement our plan to position Remy to meet the challenges of our industry.

"This is excellent news for our customers, suppliers and employees worldwide because it paves the way for a promising future for Remy and its long-term viability."

As previously reported, the consenting noteholders have agreed to backstop a rights offering of new preferred stock that will provide $85 million of new capital to fund the plan and the company's post-bankruptcy operations.

DIP details

The company said it also has a binding commitment from Barclays Capital for up to $225 million in debtor-in-possession financing and up to $330 million of long-term exit financing.

According to court documents, the company is seeking interim access to $155 million of the DIP facility, including $105 million of the first-lien term loan and $50 million under the revolving credit facility portion.

The DIP facility includes a $120 million asset-based revolver, including up to $20 million for letters of credit, and a $105 million term loan.

Maturity will be the earlier of six months from closing or upon the effective date of a plan of reorganization.

Interest on the revolver will be Libor plus 200 basis points, and interest on the term loan will be Libor plus 450 bps.

On the revolver, after three months from the closing date, interest on the DIP facility will be determined based on excess availability.

If excess availability is greater than $85 million, interest on the revolver will be Libor plus 175 bps; if excess availability is $40 million to $85 million, interest will be Libor plus 200 bps; and if excess availability is less than $40 million, interest will be Libor plus 225 bps.

The DIP facility can be converted into exit financing on the plan effective date.

When the DIP facility is converted, the company will have the option to borrow an additional $55 million under the first-lien DIP term loan and $50 million under a second-lien term loan.

A hearing on interim DIP approval is scheduled for Wednesday.

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 to be made to holders of its senior notes and senior subordinated notes;

• Exchange its existing 8 5/8% senior notes for $100 million of new third-lien pay-in-kind notes and $45 million in cash, plus roughly $10 million in interest and $2 million of new preferred stock;

• Convert the 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 in 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.

Debt information

Remy said its debt includes an $80 million term loan; $125 million of senior secured floating-rate notes due April 15, 2009; $145 million of 8 5/8% notes due Dec. 15; $165 million of 11% senior subordinated notes due May 1, 2009; and $150 million of 9 3/8% senior subordinated notes due April 15, 2012.

The company's largest unsecured creditors include:

• U.S. Bank NA, indenture trustee, with a $165 million bond issuance claim, a $150 million bond issuance claim and a $145 million bond issuance claim;

• U.S. Customs and Border Protection, with a $7.28 million promissory note claim;

• Bocar SA de CV, Mexico City, with a $3.45 million trade claim;

• REA Magnet Wire Inc., Ft. Wayne, Ind., with a $2.75 million trade claim;

• A&E Auto Electric, Spartanburg, S.C., with a $2.25 million trade claim;

• Osar (Italy), Turin, Italy, with a $1.72 million trade claim;

• Kolektor Group, with a $1.69 million trade claim;

• Sankaku (Xiamen) Auto Parts, with a $1.57 million trade claim;

• Wells Manufacturing Corp., Fond Du Lac, Wis., with a $1.53 million trade claim; and

• Auto Electric Suppliers, Miramar, Fla., with a $1.51 million trade claim.

Remy is 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. Its Chapter 11 case number is 07-11481.

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