Smarte Carte makes prepackaged Chapter 11 filing

New York, Feb. 11 - SMC Holdings Corp. made a prepackaged Chapter 11 filing in the U.S. Bankruptcy Court for the District of Delaware Thursday.

Included in the St. Paul airport cart operator's filing was its Smarte Carte, Inc. subsidiary.

The company blamed the "particularly challenging" environment for airport baggage cart operators since 2000 for its Chapter 11 filing. Both the decline in air travel and the difficulty of maintaining rental lockers with increased security has affected Smarte Carte.

As a result of the diminished cash flow, the company was in default under its bank facilities and senior notes.

Smarte Carte attempted to sell itself but holders of the bank loans and notes said that in light of the company's financial condition they wanted the debt to be restructured.

As of Nov. 30, Smarte Carte owed $113.6 million plus accrued interest of $8.1 million on its bank loans and $54.5 million under its senior notes plus $10.8 million of accrued interest.

Under the proposed plan of reorganization, bank lenders will receive 78.3% of the stock in the reorganized company and holders of the senior notes will receive 21.7%.

Holders of the priming loan claims, who have a higher priority than other bank lenders, will be repaid in cash, an amount estimated at $5.3 million.

Using a reorganization valuation of the company of $150 million, the note holders are expected to receive a recovery of 50%.

Black Diamond Commercial Finance, LLC and General Electric Capital Corp., which own 93% of the secured bank claims, have agreed to provide a $10 million exit facility. Bank Austria Creditanstalt Corporate Finance, Inc. may also participate. Proceeds will be used to repay the priming loans leaving around $5 million of liquidity.

Smarte Carte had assets of $114.6 million as of Dec. 31, 2003 and liabilities of $180 million.

It listed Black Diamond Capital Management LLC's BDCM Opportunity Fund, LP as the largest unsecured creditor with $22 million of note claims followed by Black Diamond's BDC Finance LLC with $13 million of note claims and General Electric Capital Corp. with $5 million of note claims and St. Paul Travelers with a $1.02 million contract claim. Accrued interest is additionally owed on the note claims.

A combined hearing on the disclosure statement and confirmation hearing is scheduled for April 4.

Smarte Carte's case number is 05-10395.

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