Oneida files Chapter 11; pre-packaged plan gives unsecured creditors 100% cash recovery

By Caroline Salls

Pittsburgh, March 20 - Oneida Ltd. filed an expected pre-packaged Chapter 11 bankruptcy Sunday in the U.S. Bankruptcy Court for the Southern District of New York, according to a company news release.

Oneida announced on March 9 that it would file for Chapter 11 after reaching an agreement with its lenders to reduce debt by about $100 million.

The company's president and chief executive officer Terry G. Westbrook said then that it is burdened by "an unmanageable debt load."

Oneida said financial institutions representing 100% of its outstanding tranche B debt and 94% of its outstanding tranche A debt have agreed to the recapitalization plan.

Under the pre-packaged plan, all of the company's stock will be issued to the holders of its tranche B debt.

The company's $115 million tranche A term loan will be refinanced with a long-term revolving credit and term loan facility from Credit Suisse.

All of Oneida's existing common and preferred stock will be canceled and holders will receive no recovery.

Treatment of creditors under the plan will include:

• Holders of secured tranche A claims will recover 100% in cash;

• Holders of secured tranche B claims will receive 100% of the stock in the reorganized company for an unknown recovery amount;

• Holders of Pension Benefit Guaranty Corp. secured claims will recover 100% in their portion of a new PBGC note, which, if they vote to accept the plan, means a $3 million variable interest promissory note, or, if they vote to reject the plan, means a $3 million non-interest-bearing promissory note;

• Holders of other secured claims will have their claims reinstated for 100% recovery;

• Holders of general unsecured claims will recover 100% in cash;

• Holders of specified unsecured claims, subordinated claims and equity interests will receive no recovery under the plan.

DIP terms

Oneida has obtained commitments from a lending syndicate led by JP Morgan Chase Bank, NA to provide up to $40 million of revolving debtor-in-possession credit.

The company requested interim approval to use up to $30 million of the DIP.

Interest will be Libor plus 375 basis points.

Oneida will pay a 200 bps closing fee, a 37.5 bps commitment fee, a $25,000 administrative fee and a $175,000 structuring fee.

Maturity will be the earliest of 45 days after the interim order if a final order has not been made, March 21, 2007, upon consummation of a plan of reorganization or upon acceleration of the loans.

In addition, a lending group led by Credit Suisse has agreed to provide up to $170 million of long-term exit financing, which will include an $80 million asset-based five-year revolving credit facility and a $90 million six-year term loan.

According to court documents, Oneida has $305.33 million in assets and $442.23 million in debt.

The Pension Benefit Guaranty Corp. was listed as the company's top unsecured creditor, with an unknown retirement plan claim. No other creditors have claims for $1 million or more.

The company's non-U.S. affiliates are not included in the Chapter 11 filing.

The company said it expects to exit Chapter 11 in about 90 days.

Oneida, based in Oneida, N.Y., makes flatware, dinnerware, crystal and metal serving pieces for consumers and the food services industry. Its Chapter 11 case number is 06-10489.

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