RathGibson files amended plan of reorganization based on asset sale

By Caroline Salls

Pittsburgh, March 9 - RathGibson Inc. filed an amended plan of reorganization and related disclosure statement Monday with the U.S. Bankruptcy Court for the District of Delaware. The new plan will be funded with the proceeds of the company's proposed $93 million asset sale.

Under its original plan, the company would have issued 10 million shares of new common stock, and holders of senior note claims would have been given the right to purchase new common stock under a backstopped rights offering.

Creditor treatment under the amended plan will include:

• Holders of debtor-in-possession facility claims, administrative expense claims, priority tax claims and priority non-tax claims will be paid in full in cash;

• Holders of other secured claims will either be paid in full in cash or receive the property securing the claim;

• Holders of pre-bankruptcy secured credit agreement claims will receive a share of a $52.75 million claim, plus any unpaid interest at the non-default rate and unpaid professional fees and expenses;

• Holders of general unsecured claims will receive a share of a class distribution;

• Holders of Rath, Greenville and RGCH equity interests will receive no distribution;

• Holders of RGCH PIK notes will receive a share of a class 5(a) distribution if they vote to accept the plan and no distribution is they vote to reject it; and

• Holders of RG Tube interests will receive a share of $25,000 in cash.

Under the previous plan:

• Holders of DIP facility claims would have been paid in full in cash from the proceeds of an exit facility and/or rights offering and received a share of DIP lender stock;

• Holders of administrative expense claims, priority tax claims, priority non-tax claims, general unsecured claims and other secured claims would have been paid in full in cash;

• To the extend not already paid using DIP facility proceeds, holders of pre-bankruptcy secured credit agreement claims would have been paid in full in cash;

• Holders of senior note claims would have received a share of 100% of the new common stock in the reorganized company, the right to participate in a rights offering and payment of ad hoc committee fee claims; and

• Holders of existing securities law claims and existing interests would have received no distribution.

DIP loan amendment

In addition, the company requested court approval to amend its DIP facility.

Under the amendment, the DIP loan termination date will be extended to June 30 from Feb. 10, the company must obtain court approval of the disclosure statement and sale procedures by April 9, the plan must be confirmed by June 1, and the plan must take effect by June 16.

A hearing on approval of the disclosure statement is scheduled for April 9, and the plan confirmation hearing is set for May 21.

RathGibson, a Lincolnshire, Ill.-based manufacturer of highly engineered stainless steel, nickel and titanium tubing, filed for bankruptcy on July 13, 2009. Its Chapter 11 case number is 09-12452.

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