Milacron creditors committee objects to sale procedures, proposes alternative

By Jennifer Lanning Drey

Portland, Ore., June 23 - Milacron, Inc.'s official committee of unsecured creditors objected to the bidding procedures related to the proposed $175 million sale of substantially all of its assets to a company formed by affiliates of Avenue Capital Group, funds and accounts managed by DDJ Capital Management LLC and holders of about 93% of the company's 11½% senior secured notes.

In a Monday filing with the U.S. Bankruptcy Court for the Southern District of Ohio, the committee said the proposed stalking horse agreement makes no provision for any reasonable accommodation or recovery by unsecured creditors, whose claims are likely to total more than $400 million.

The committee believes Milacron's assets are worth more than the stalking horse bid.

Additionally, the creditors said potential strategic bidders interested in buying specific Milacron businesses or parts of businesses cannot outbid the stalking horse bid for all of the assets unless their bids are combined with other bids.

However, even if bids are combined, the stalking horse bidder can credit bid substantial amounts to outbid any bid or combination of bids, they said.

The creditors also noted that the stalking horse bidder plans to sell off the businesses and their parts through private sales if they win the assets.

Alternative proposal

The committee said it has proposed an alternative structure that would permit the estate and unsecured creditors to share in the value of Milacron's assets in excess of what is owed to the secured creditors if greater value is realized in the near future.

According to the filing, under the proposal, the secured creditors would be provided a preferred equity interest and a majority of the junior equity interest in the stalking horse bid, and the estate with a minority of the junior equity interest in the stalking horse bid.

The estate and the unsecured creditors would not receive any recovery as a result of the minority junior equity position unless the value of the assets exceeds the amount of secured debt.

The committee said it remains ready to discuss the proposal and consider reasonable alternatives.

Milacron, a Cincinnati-based supplier of plastics-processing technologies and industrial fluids, filed for bankruptcy on March 10. Its Chapter 11 case number is 09-11235.

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