OCA plan of reorganization support agreement approved

By Caroline Salls

Pittsburgh, May 11 - OCA, Inc. obtained court approval of a plan support agreement with its senior lenders and official committee of unsecured creditors that will serve as a basis for a plan of reorganization that would give the lenders 100% of the equity in the reorganized company, according to a Thursday filing with the U.S. Bankruptcy Court for the Eastern District of Louisiana.

Under the support agreement and term sheet, the company will file a plan of reorganization that calls for a substantial de-leveraging of OCA's senior debt.

Also under the term sheet, existing equity holders will receive their share of an existing equity deferred payment if they vote to accept the plan, and an incentive plan will be established for management and the doctors to participate in ownership of the reorganized company.

The company will convert the first $50 million of lender claims into a $50 million four-year term loan. The lenders will share in payments on the loan.

The lenders will receive all of the new stock in the reorganized company as payment on the remainder of its claims.

Holders of administrative claims, other secured claims and priority tax claims will recover 100% in cash.

The company said it plans to obtain a four-year $10 million in exit financing to repay its debtor-in-possession financing and to be used for working capital.

Interest on the both loans will be Libor plus 600 basis points.

OCA, a Metairie, La., provider of business services to orthodontic and dental practices, filed for bankruptcy on March 14. The Chapter 11 case number is 06-10179.

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