Metromedia Steakhouses out of bankruptcy after plan takes effect

By Caroline Salls

Pittsburgh, Oct. 14 - Metromedia Steakhouses Co. emerged from Chapter 11 bankruptcy when its joint plan of reorganization took effect Wednesday, according to a filing with the U.S. Bankruptcy Court for the District of Delaware.

The plan was confirmed on Oct. 1.

The plan proponents include Metromedia Steakhouses and debtors JOST Restaurant Financing, Inc., Puerto Rico Ponderosa, Inc. and PON Realty I, Inc., as well as ultimate parent company and pre-bankruptcy and post-bankruptcy lender Metromedia Co.

Creditor treatment will include:

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

• Secured claims will either be reinstated or remain unaltered or holders will be paid in full in cash;

• Holders of general unsecured claims against Metromedia Steakhouses and PON will receive payment from an MSC-PON creditor trust, which will include an $850,000 up-front unsecured creditor payment and a $3.65 million 7½% note.

The company said it believes these creditors will receive cash over time equal to about 50% of their claims.

However, any holders of general unsecured claims against Metromedia Steakhouses and PON will have the option to receive equity in the reorganized company instead of the creditor trust distribution;

• Holders of convenience class claims will receive the lesser of 100% of their claim or $300 in cash;

• Holders of general unsecured claims against JOST and Puerto Rico Ponderosa will either be paid in full in cash or the rights to their claims will be unaltered;

• Holders of interests in Metromedia Steakhouses will receive no distribution; and

• Holders of interests against the other debtors will retain their interests.

The parent company has agreed to provide $5.84 million in eight-year exit financing, as well as a $4.68 million 66-month working capital line. The exit financing and working capital line will bear interest at 7½%.

In addition, Metromedia has agreed to receive equity in exchange for its $258 million in general unsecured claims, rather than participate in the MSC-PON creditor trust up-front payment and note.

The parent company will also guarantee the first $359,867 payment on the creditor trust note.

Metromedia Steakhouses is a steakhouse company based in Plano, Texas, that operates restaurants under the names Ponderosa Steakhouse and Bonanza Steakhouse. The company filed for bankruptcy on Oct. 22, 2008. Its Chapter 11 case number is 08-12490.

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