Raser Technologies plan of reorganization takes effect as of Sept. 9

By Caroline Salls

Pittsburgh, Sept. 12 - Raser Technologies Inc.'s plan of reorganization took effect on Sept. 9, according to a Friday filing with the U.S. Bankruptcy Court for the District of Delaware.

As previously reported, the plan, which was confirmed on Aug. 30, included the sale of the company's equity to Linden Capital LP and Tenor Capital Management Co. LP.

The purchase price includes a credit in the amount of all obligations owed to Linden and Tenor, the sponsors, under the DIP facility, a credit in the amount of all obligations of each reorganized debtor to the pre-petition lender under the bridge facility, a cash payment to the reorganized debtors of $2.5 million, initial contributions to the creditor trust and to the litigation limited liability corporation to be established and cash to pay in full creditors who make the cash election.

The reorganized debtors will be known as Cyrq Energy Inc.

Under the plan, the creditors' trust will hold all rights to pursue avoidance actions and claims against directors and officers.

The litigation limited liability corporation will hold the right to pursue claims against Pratt & Whitney Power Systems.

Also incorporated in the reorganization plan is the debtors' settlement with Evergreen-FE Lightning Dock LLC, which calls for allowing Evergreen's $3.6 million claim under the terms of the Lightning Dock financing documents and transfer of Lightning Dock collateral to reorganized Los Lobos Renewable Power LLC.

Reorganized Los Lobos will make reasonable efforts to sell the Lightning Dock collateral and pay up to $500,000 of the proceeds from sale to Evergreen-FE. Those proceeds will be used to reduce Los Lobos' obligations under the Evergreen promissory note.

And all of the equity of the reorganized Lightning Dock Project Entity will be issued to reorganized Los Lobos.

Creditor treatment

Treatment of creditors under the confirmed reorganization plan includes:

• Holders of Thermo 1 secured claims, estimated at $10.33 million, will receive 58.1% recovery;

• Holders of Raser Power secured claims, estimated at $500,000, will receive a new promissory note made by Raser Power Systems LLC secured by a lien on the assets that constitute collateral security and requiring payments having an aggregate present value equal to the value of such collateral security or the property held as collateral. The recovery is 100%;

• Holders of bridge facility secured claims, estimated at $800,000, will receive either the consideration provided for in the Evergreen-FE settlement or, if the conditions of the Evergreen settlement are not met, the Lightning Dock collateral. The recovery is 100%;

• Holders of other secured claims, estimated at $77,304, will receive full cash payment or the property held as collateral;

• Receiving a pro rata share of the interests in the creditor trust and the class B membership interests in the Litigation LLC are holders of general unsecured claims against Raser, estimated at $65 million; holders of general unsecured claims against the Thermo 1 Project Entity, estimated at $622,452; holders of general unsecured claims against Lightning Dock Project Entity, estimated at $2.8 million; and holders of general unsecured claims against non-Merrill Lynch subsidiary debtors, estimated at $1.4 million;

• Holders of general unsecured claims against Merrill Lynch debtors, estimated at $21.4 million, will hold the note for the reorganized Raser;

The holders of these claims also receive a waiver of all causes of action against Merrill Lynch, specifically excluding any and all avoidance actions that may be pursued in connection with the transfers of $27.3 million of fees from Raser to Merrill Lynch. Merrill Lynch denies that any of the transfers can be the subject of a viable avoidance action;

• Holders of convenience class claims, estimated at $1.4 million, will receive their pro rata portion of the convenience class fund for a recovery of 25.1%;

• Holders of opt-out unsecured claims, holders of subordinated securities law claims, holders of equity interests in Raser and holders of interests in subsidiary debtors will receive no distribution; and

• Holders of cash election claims will receive payment in cash equal to 1% percent of their claims.

Raser, based in Provo, Utah, is a technology licensing and development company focused on geothermal power generation. The company filed for bankruptcy on April 29, and its Chapter 11 case number is 11-11315.

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