Owens Corning to pay $100 million equity commitment fee to J.P. Morgan under new plan agreement

By Caroline Salls

Pittsburgh, May 11 - Owens Corning's agreement setting terms for a new plan of reorganization calls for the company to pay a $100 million fee to J.P. Morgan for its equity commitment agreement, under which it will backstop a proposed rights offering, according to details released Thursday in an 8-K filing with the Securities and Exchange Commission.

Also under the plan terms, the proposed new plan must take effect by Oct. 30.

Parties to the agreement include the official committee of asbestos claimants, the official committee of unsecured creditors, the legal representative for future claimants, the official representatives of bondholders and trade creditors, the ad hoc bondholders committee and the ad hoc equity holders committee.

Details of the agreement include:

• Existing Owens Corning stock will be canceled and 131.4 million shares of new stock will be issued with a plan value of $3.942 billion;

• Bank creditors will receive a full recovery of $2.276 billion in cash, including interest calculated as of March 31 and continuing to accrue through the effective date;

• Non-bondholder senior and junior unsecured creditors will receive about $249 million in cash;

• Bondholders will receive equity and asbestos claimants will receive cash and, if the FAIR Act does not become law, some equity;

• Bondholders will receive 26.6 million shares of the reorganized company's stock, and bondholders and some other general unsecured creditors will have the right to purchase 72.9 million additional shares of the reorganized company's stock at $30.00 per share via an equity rights offering.

The company said it expects J.P. Morgan Securities to syndicate the backstop commitment to interest holders led by D. E. Shaw Laminar Portfolios, LLC.

• Owens Corning and Fibreboard asbestos claimants collectively will receive $2.872 billion in cash, which will be deposited into a trust fund;

• Owens Corning and Fibreboard asbestos claimants also will receive a $1.39 billion contingent payment right, which will accrue interest at a rate of 7% from the effective date through the payment date and 28.6 million shares of the reorganized company's stock;

• Holders of Owens Corning 6.5% convertible monthly income preferred securities will receive warrants to purchase 10% of the fully diluted shares of the reorganized company, at an exercise price of $43.00 per share;

• Existing holders of Owens Corning stock will receive warrants to purchase 5% of the fully diluted shares of the reorganized company, at an exercise price of $45.25 per share.

The agreement sets Owens Corning's total enterprise value at emergence at $5.858 billion and assumes a total recovery value of $8.576 billion.

Owens Corning, a Toledo, Ohio, building materials company, filed for bankruptcy on Oct. 5, 2000 in the U.S. Bankruptcy Court for the District of Delaware. Its Chapter 11 case number is 00-3837.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.