Hawkeye Renewables nixes acceptance condition for second-lien lenders

By Caroline Salls

Pittsburgh, May 26 - Hawkeye Renewables, LLC filed an amended plan of reorganization Tuesday with the U.S. Bankruptcy Court for the District of Delaware to eliminate plan vote conditions previously attached to the proposed distribution for holders of second-lien credit agreement claims.

Under the amended plan, holders of first-lien credit agreement claims will receive their share of new secured term loans and new class A, class B and class C units.

However, the class B and class C units will be automatically transferred to holders of second-lien credit agreement claims.

Under the original plan, the class B units were to be issued only if the second-lien lenders voted to accept the plan. That condition has been removed from the amended plan.

As a result of these changes, the first-lien lenders will receive 99% of the equity interests in the reorganized company and second-lien lenders will receive 1%.

In addition, the profit interests to be received by the second-lien lenders were increased to 10% from 7.5%.

Creditor treatment will include:

• Holders of first-lien credit agreement claims will receive their share of $25 million in new secured term loans and new class A, B and C units. The class B and C units will be transferred to holders of second-lien claims;

• Holders of second-lien credit agreement claims will receive a share of new class B units and new class C units;

• Holders of general unsecured claims and equity interests will receive no distribution;

• Holders of priority claims will be paid in full in cash; and

• Holders of other secured claims will either be paid in full in cash, receive the collateral securing the claim or have their claims reinstated.

Hawkeye has also asked the court to rule that it does not need to re-solicit votes on the plan in connection with the proposed changes.

Hawkeye Renewables is an Iowa Falls, Iowa, manufacturer of alcohol-based fuel derived from corn. It filed for bankruptcy on Dec. 21. The Chapter 11 case number is 09-14461.

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