Atkins files plan of reorganization

By Caroline Salls

Pittsburgh, Aug. 25 - Atkins Nutritionals, Inc. filed its plan of reorganization and related disclosure statement Wednesday with the U.S. Bankruptcy Court for the Southern District of New York, giving new notes and common stock to holders of the company's first- and second-lien bank debt.

The reorganized company will issue $110 million in new five-year pay-in-kind tranche A notes with an interest rate of Libor plus 1200 basis points and will issue 15 million shares of new common stock, 10 million of which will be distributed to holders of first- and second-lien secured claims. The remaining five million shares will be reserved for future uses.

Of the total interest for the new tranche A notes, Libor plus 500 basis points will be paid quarterly in cash and 700 basis points will be paid in cash or new notes, at the company's option.

Treatment of creditors under the plan will include:

*Holders of $95,000 in priority tax claims and $40,000 in priority non-tax claims will receive 100% recovery in cash;

*Holders of $216.4 million in first-lien secured claims will receive their share of the reorganized company's new tranche A senior notes and 8.4 million shares of new common stock in the reorganized company;

*Holders of second-lien secured claims will receive 1.6 million in new common stock and contingent value rights interests;

*Holders of $720,000 in other secured claims will receive 100% recovery in cash or surrender of the underlying collateral securing their claim;

*Holders of general unsecured claims and old equity interests will receive no distribution under the plan.

The company plans to secure a new $25 million three-year working capital exit facility from UBS as agent and a syndicate of lenders to be determined.

Atkins, a New York-based diet company, filed for bankruptcy on July 31. Its Chapter 11 case number is 05-15913.

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