Lear files plan based on lender, noteholder support agreements

By Caroline Salls

Pittsburgh, Aug. 17 - Lear Corp. filed its plan of reorganization and related disclosure statement Friday with the U.S. Bankruptcy Court for the Southern District of New York.

As previously reported, the company reached an agreement in principle regarding a consensual debt restructuring with steering committees representing its secured lenders and its bondholders on July 1.

The proposed plan restructures $2.3 billion of credit agreement debt and $1.3 billion of debt under the company's 8½% senior notes due 2013, 5¾% senior notes due 2014, 8¾% senior notes due 2016 and zero-coupon convertible senior notes due 2022.

After the plan effective date, Lear's capital structure will include an up to $500 million first-lien term loan exit facility, a $600 million second-lien term loan, $500 million of series A convertible preferred stock and a single class of common stock for management equity grants, the issuance of warrants for lenders to buy up to $25 million of common stock and the issuance of warrants for senior noteholders and other general unsecured creditors to purchase up to 15% of the new common stock.

Creditor treatment

Creditor treatment will include:

• Holders of administrative claims, other priority claims and priority tax claims will be paid in full in cash;

• Holders of other secured claims will either be paid in full in cash or receive the collateral securing the claim;

• The company's debtor-in-possession credit facility will either be paid in full in cash or converted into the exit facility. If the DIP facility is converted into exit financing, the holders of DIP loan claims will either receive warrants to purchase $25 million of stock in the reorganized company or cash equal to 5% of the amount of the claim that is converted to exit financing;

• Holders of senior credit facility claims will receive a share of $600 million of new second-lien term loans, $500 million of series A convertible preferred stock, which can be converted into new common stock in the reorganized company and 35.5% of the new common stock;

• Holders of senior notes claims, lender unsecured deficiency claims and other general unsecured claims will receive a share of 46% of Lear's new common stock and warrants to purchase an additional 15% of new common stock;

• Holders of convenience claims will recover 25% in cash;

• Existing equity holders will receive no distribution.

The plan confirmation hearing is scheduled for Nov. 2.

Lear, a Southfield, Mich.-based automotive parts supplier, filed for bankruptcy on July 7. Its Chapter 11 case number is 09-14326.

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