Oglebay Norton noteholders, shareholders object to reorganization plan

By Jeff Pines

Washington, July 16 - Oglebay Norton Co.'s first amended disclosure statement received objections from Nufleet LLC and Capital Works LLC, both noteholders, a group of shareholders and the ad hoc committee of senior secured noteholders.

Nufleet and Capital Works, the shareholders and noteholders filed their objections with the U.S. Bankruptcy Court for the District of Delaware on Friday.

All three believe the disclosure statement for the Cleveland-based industrial minerals company lacks adequate information.

Nufleet, Capital Works and the shareholders object because the disclosure statement does not mention that a consortium, which includes them, offered to buy Oglebay Norton for $451 million. They also complained that the consortium's efforts to conduct due diligence "thus far has been met with unflinching resistance by the debtors and their professionals."

The most recent letter of intent was sent to the company on July 1.

Another problem, Nufleet and Capital Works said, is that the disclosure statement does not mention management's negotiations with attorneys for the mass tort claimants over asbestosis and silicosis.

The disclosure statement does mention 72,000 asbestos-related claims and 21,000 silica-related claims and that the company has multiple layers of insurance to protect it from having to pay on claims. The shareholders, however, said the disclosure statement has little information on just how much insurance Oglebay Norton does have to protect it. In addition, the disclosure statement does not provide an estimated value of the silica-related claims.

The shareholders said Oglebay Norton is "woefully underinsured and will likely be called upon to pay a significant portion of the toxic tort litigation" from its own pocket. If this is the case, the tort claim holders should be able to vote on the plan, they said.

The ad hoc secured noteholders object to the disclosure statement because the company's 10% senior subordinated noteholders will get common stock in the reorganized company, but they will not. The ad hoc committee plans to vote against the plan so they believe the plan is unconfirmable. Members of the committee either hold or act as investment advisors to holders of more than 75% of the secured notes. It said courts have refused to approve disclosure statements for plans that are obviously not confirmable.

The committee also said the disclosure statement is misleading because it erroneously suggests the senior subordinated noteholders will get a 100% recovery.

A July 27 hearing is scheduled.

Oglebay Norton filed for bankruptcy on Feb. 23. Its Chapter 11 case number is 04-10558.

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