Lupatech wins U.S. recognition and enforcement of reorganization plan

By Kali Hays

New York, July 14 – Lupatech SA obtained recognition and enforcement of its foreign pre-packaged reorganization plan on July 14 from the U.S. Bankruptcy Court for the Southern District of New York.

As previously reported, the company’s extrajudicial reorganization plan was approved June 4 by the 2nd Court of Law of the Nova Odessa Judicial District and the company asked the U.S. Bankruptcy Court for validation of the order as part of its Chapter 15 proceeding.

The company said the plan, which was submitted to the holders of perpetual bonds, is an important step in the process of restructuring its debt and capital structure.

Under the plan, Lupatech Finance will issue new notes to unsecured bondholders in a principal amount equal to 15% of the total outstanding principal amount and unpaid interest on the unsecured bonds.

In addition, Lupatech will issue shares in its capital stock or American Depositary Shares (ADSs) to bondholders who tendered their unsecured bonds at an issuance price representing the remaining 85% of the total outstanding principal amount and unpaid interest on the unsecured bonds.

The company said each ADS will represent one share. The ADSs and shares will be issued at an exchange price equal to R$0.25 per share.

Lupatech will issue the ADSs and shares in a capital increase approved by its board of directors following current shareholders’ approval of an increase to its authorized capital.

The company said its existing shareholders hold a right of first refusal over the issuance of the shares and may elect to exercise the right to acquire the shares at face value for cash at the stated exchange price of R$0.25 per share.

To the extent that Lupatech’s current shareholders exercise their rights of first refusal, the amount of shares and ADSs available for distribution under the plan will decrease, and the cash received by the company in exchange for the shares will be distributed to the bondholders and other creditors in accordance with the terms of the plan.

Lupatech manufactures industrial materials and is based in Caxias do Sul, Brazil. The company filed for bankruptcy on May 23 under Chapter 15 case number is 14-11559.

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