Mecachrome, noteholder committee agree to key restructuring terms

By Caroline Salls

Pittsburgh, Aug. 7 - Mecachrome International Inc. has reached an agreement with a steering committee for holders of its senior subordinated notes due 2014 on the key terms of a debt restructuring plan to be implemented under Mecachrome's Companies' Creditors Arrangement Act proceedings, according to a news release.

The plan will be funded by FCPR Aerofund, FCPR Aerofund II, and the Fonds de solidarité FTQ. The Fonds Stratégique d'investissement is also participating in this investor consortium via an equity contribution.

As a result, Mecachrome said it has entered into an amended plan funding agreement with the investors.

"This is an essential and important milestone in our restructuring and I believe that the nature of this agreement should reassure our customers, suppliers and employees," Mecachrome president and chief executive officer Julio De Sousa said in the release.

"I continue to believe that upon emergence from the proceedings Mecachrome will be, more than ever, well-equipped to support its clients and continue its development."

Under the plan, the investors will contribute €62 million, including €22 million in exit financing, in exchange for a 100% equity interest in the reorganized company.

In addition, noteholders will receive €33 million in cash, representing a 16% recovery, and other Canadian creditors will also recover about 16% in cash.

Under a related plan support agreement, members of the steering committee, which represents holders of 33.3% of the notes, will vote in favor of the plan.

If holders of at least 66 2/3% of the total principal amount of the notes enter into the support agreement by Aug. 19, noteholders and other Canadian creditors will share in a €1.66 million incentive amount, and the noteholders will share in another at least €1 million incentive.

Mecachrome is required to obtain at least €22 million in exit financing under the restructuring agreement.

The company's creditors are expected to vote on the plan filed Thursday with the Superior Court of Québec on Aug. 26.

Mecachrome is a Montreal-based designer, manufacturer and assembler of precision-engineered industrial components for the automotive and aerospace industries in Europe and North America.

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