Foamex to offer second-lien loan holders stock for debt

By Sara Rosenberg

New York, March 12 - Foamex International Inc. is in plans to offer its second-lien loan lenders the option to purchase common stock at $1.50 per share, using their second-lien loans at par value, according to an 8-K filed with the Securities and Exchange Commission Wednesday.

The company is also planning a rights offering to all of its stockholders to purchase its common stock at $1.50 per share.

Under the offerings, the company anticipates receiving collectively a minimum of $80 million in new equity, which would be through a combination of cash and an exchange of second-lien loans.

Proceeds from the rights offering would be used to prepay the loans under the company's first-lien credit facility, and any second-lien loans that are used to purchase common stock would be canceled.

As a result, the second-lien offering and the rights offering would significantly deleverage the company.

The offerings are expected to be completed in the second quarter, subject to getting the appropriate lender amendments and consents, which the company is currently seeking to obtain.

Consents from loan lenders are due at 5 p.m. ET on March 13.

The consent fee for the first-lien lenders is $862,500, to be shared pro rata by consenting lenders, and the consent fee for the second-lien lenders is 25 basis points.

Bank of America is leading the consent and amendment process.

Foamex is a Linwood, Pa.-based manufacturer of flexible polyurethane and advanced polymer foam products.

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