OCA files reorganization plan; senior lenders to receive equity; doctors, management get stock options

By Caroline Salls

Pittsburgh, May 15 - OCA, Inc. filed its plan of reorganization and related disclosure statement Monday with the U.S. Bankruptcy Court for the Eastern District of Louisiana, and its plan support agreement was approved by the court, according to a company news release.

Under the plan, the senior secured debt held by the company's senior lenders will be reduced to $50 million from about $92 million and the senior lenders will receive all of the equity of the reorganized company.

Unsecured creditors will receive their share of a $2.7 million cash payment and will be eligible to receive additional deferred cash payments up to the full amount of their allowed claims after distributions and permanent cash paydowns to senior lenders exceed $100 million.

All of the company's outstanding stock will be canceled, and existing shareholders will be eligible to receive $1.5 million in deferred cash payments after distributions and permanent cash paydowns to the senior lenders exceed $115 million, as well as an additional $3.5 million if the distributions and paydowns exceed $150 million.

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.

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

The company said it plans to obtain a $10 million four-year 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.

According to the disclosure statement, a doctors' incentive plan will allow doctors of affiliated practices to obtain options or restricted stock grants in reorganized OCA, for up to 10% of the new common stock to be issued.

In addition, the company's management incentive plan will allow the board of directors and members of management to obtain options or restructured stock grants for up to 10% of the new common stock.

Under the plan support agreement, Bart Palmisano Sr. was terminated as chief executive officer.

Chief restructuring officer Michael Gries will serve as interim chief executive officer.

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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