Las Vegas Monorail revises plan to allow expansion, change treatment

By Jim Witters

Wilmington, Del., Sept. 30 - Las Vegas Monorail Co. filed a revised amended plan of reorganization and related disclosure statement on Thursday with the U.S. Bankruptcy Court for the District of Nevada to permit expansion of the rail line after reorganization and to change the proposed treatment for second-tier bond claims.

Under the revised plan, the monorail would be free to build permitted interconnections and permitted stations after obtaining unanimous consent from the reorganized LVMC's board of directors. The reorganized LVMC's new indebtedness for new interconnection projects may not exceed $30 million. New indebtedness for construction of permitted stations may not exceed $12 million at $6 million per station.

"Management believes that the modifications of the amended plan set forth above will materially enhance its ability to raise capital for the enhancement and expansion of the existing project, which will in turn increase project revenues and thus the expected life of the monorail," according to the revised disclosure statement filed on Thursday.

Before the changes, second-tier bond holders were to receive no distribution.

Second-tier bond claims

Under the revised plan, the debtor has stipulated with the second-tier trustee, first-tier trustee and majority bond holders to terminate the automatic stay to permit the second-tier trustee to file a petition with the Minnesota State Court seeking authority to distribute the second-tier debt service reserve fund.

The funds would pay for the second-tier trustee fees and other second-tier bond claims after $400,000 is paid to the first-tier trustee for a portion of the first-tier trustee's expenses.

The holders of second-tier bond claims may receive distributions, subject to entry of the order of the Minnesota State Court approving the petition.

No indenture trustee

The revised disclosure statement filed on Thursday states that Wells Fargo Bank, NA has not yet agreed to act as indenture trustee under the new indenture.

If Wells Fargo does not agree to act as the new trustee, the majority first-tier bondholders shall designate a new trustee at least five days before the confirmation hearing.

Creditor treatment

Treatment of creditors under the revised plan will include the following:

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

• Holders of other secured claims will be left unimpaired by the reorganized LVMC;

• Holders of general unsecured claims will receive the lesser of 100% of their claim or a share of $175,000;

• Holders of first-tier bond secured claims will receive a share of $15 million of 10% cash pay senior notes due June 30, 2019 and $19.5 million of 10% pay-in-kind capital expenditure notes due June 30, 2019;

• Holders of first-tier unsecured bond claims will receive $10 million of 8.315% pay-in-kind capital appreciation notes, which will mature on the earliest of a triggering event and June 30, 2055, and their first-tier bonds will be canceled;

• Third-tier bond claims will receive no distribution. However, the debtor continues to negotiate with the director and the third-tier trustee regarding their objections to the amended plan. The revised disclosure statement includes notice that those parties may enter into a settlement agreement with the debtor that may become part of the amended plan.

• Director claims will be impaired; and

• Holders of subordinated claims will receive no distribution.

The company, a Las Vegas non-profit monorail operator, filed for bankruptcy on Jan. 13, 2010. The Chapter 11 case number is 10-10464.

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