Meridian Automotive files plan of reorganization to include disclosure statement

By Caroline Salls

Pittsburgh, May 26 - Meridian Automotive Systems, Inc. filed its first amended joint plan of reorganization and related disclosure statement Friday with the U.S. Bankruptcy Court for the District of Delaware to include the disclosure statement.

Meridian originally filed the plan on March 30 and received court approval to delay filing of the disclosure statement.

The plan is being proposed in connection with pre-bankruptcy first-lien lenders Camulos Master Fund LP, DK Acquisition Partners LP and Stanfield Capital Partners LLC.

"Filing a disclosure statement is a major step towards our exit from Chapter 11, which we are committed to doing as quickly and efficiently as possible," president and chief executive officer Richard E. Newsted said in a company news release.

Under the plan, holders of pre-bankruptcy first-lien claims will have options for all-cash recovery, cash and third-lien notes recovery or cash and class A convertible preferred stock recovery, while second-lien secured creditors will receive new common stock and rights to purchase class A convertible preferred stock.

Unsecured creditors will share in a trust funded by litigation proceeds and contingent value rights.

The company will issue up to $150 million in exit second-lien notes and new third-lien notes to be distributed to holders of pre-bankruptcy first-lien claims, with the total amount of second-lien exit notes and new third-lien notes not to exceed $150 million.

The plan also calls for issuance of $53 million in new common stock and $62 million of class A convertible preferred stock.

Plan creditor treatment

Treatment of creditors under the plan will include:

• Holders of $303.4 million in pre-bankruptcy first-lien claims who vote to accept the plan will receive either 88% of their claims; 50% of their claims in cash and new third-lien notes equal to 50% of their claims; or 80% in cash and 20% in class A convertible preferred stock.

If the first-lien claimants vote to reject the plan, they will receive either 85% in cash; 30% in cash and 70% in new third-lien notes or 80% in cash and 20% in class A convertible stock;

• Holders of $55 million in pre-bankruptcy second-lien secured claims will receive their share of new common stock in the reorganized company, rights to purchase their share in the class A convertible preferred stock, a lien avoidance release if they accept the plan and their share of a $1.4 million total commitment fee, payable in class A convertible preferred stock, under a preferred equity funding agreement, for a total recovery of 96%;

• Holders of $125 million in pre-bankruptcy second-lien deficiency claims will receive their share of pre-bankruptcy second-lien claim trust interests, which will entitle them to receive cash recoveries on some avoidance actions contributed to a litigation trust;

• Holders of $96 million in general unsecured claims will receive their share of general unsecured claims trust interests, funded by net cash recoveries on avoidance actions and reserve actions in the litigation trust, distributions of a litigation trust and contingent value rights;

• Holders of $172.9 million in pre-bankruptcy subordinated claims will receive their share of subordinated claims trust interests, funded by avoidance action and reserve action net cash recoveries and litigation trust distributions and their share of contingent value rights after all first-lien and second-lien claims have been paid;

• Holders of old Meridian interests will receive no distribution under the plan.

Meridian said it plans to obtain a $125 million revolving exit facility and a $100 million term loan exit facility.

According to the release, the company requested a disclosure statement approval hearing be held in June.

Meridian, a Dearborn, Mich., supplier of lighting, exterior composites, console modules, instrument panels and other interior systems to automobile and truck manufacturers, filed for bankruptcy on April 26, 2005. Its Chapter 11 case number is 05-11168.

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