Mississippi Chemical reorganization plan gives noteholders estimated 60.1% recovery

By Jeff Pines

Washington, April 16 - Mississippi Chemical Corp.'s bondholders can expect an estimated 60.1% recovery, according to the company's disclosure statement. Under the liquidation analysis, general unsecured creditors would get up to a 10.6% recovery.

Mississippi Chemical filed its disclosure statement and reorganization plan with the U.S. Bankruptcy Court for the Southern District of Mississippi on April 16.

There are an estimated $221.9 million in bond claims from $200 million in 7.25% senior notes due 2017 and $14.5 million in 5.8% industrial revenue bonds. Under the plan, bondholders will get 90% of the new stock at the rate of one share of common stock in the reorganized company for each $15 of the holder's claim, rounded to the nearest $15. The plan calls for holding 10% of the new company's stock for a management incentive plan.

Shareholders will get three series of warrants: series A are 7-year warrants to buy up to a total of 5% of the reorganized company's fully diluted common stock at a price of $9.02 per share; series B warrants are for seven years and entitle the holders to buy up to 15% of the fully diluted stock at a price of $15 per share; and series C warrants mature in seven years, have a strike price of $18.75 per share and would give the holders the opportunity to buy up to 25% of the fully diluted common stock.

Once the stock price hits $15 per share, the former bondholders will recover 100% of their claims, the disclosure statement said.

The plan calls for the reorganized company to have a $50 million revolver, a $20 million term loan and an estimated $64.4 million mezzanine note. The final amount of the mezzanine note would be less whatever cash is paid to the holders of class 5 and class 6 claims, both of which are secured claims.

The note matures in three years, but the company has the option to extend it for two more for an extension fee of 3% of the outstanding principal. The interest rate will be either prime plus 4% cash plus 7% payment-in-kind, or at Mississippi Chemical's option all payment in kind at prime plus 13% payable quarterly. In addition, there will be a commitment fee of 2% payable on the effective date, and the company will have the right to prepay up to $25 million of the note at anytime for 102% of the amount prepaid.

The class 5 and 6 creditors will also get an interest in a $70 million flow-through note, which will bear interest at 15% cash, or at the company's option 18% payment in kind, payable quarterly. It will have a four-year maturity and the company will have the right to extend for a year with a 2% extension fee.

The Yazoo City, Miss.-based producer of nitrogen and phosphorus products filed for bankruptcy on May 15, 2003 after it missed a $7 million interest payment on its senior notes.

Mississippi Chemical's Chapter 11 case number is 03-02984.

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