Tower Automotive files plan that includes Cerberus asset purchase agreement

By Caroline Salls

Pittsburgh, May 1 - Tower Automotive Inc. filed a plan of reorganization and related disclosure statement Tuesday with the U.S. Bankruptcy Court for the Southern District of New York that includes the agreement for the sale of substantially all of Tower's assets to an affiliate of Cerberus Capital Management, LP.

On the effective date of the plan, a post-consummation trust will be established and a post-consummation trust administrator will be appointed.

In addition, an unsecured creditors trust will be established to liquidate the company's assets.

As previously reported, Tower Automotive obtained court approval of its restructuring term sheet on April 6, under which the company will sell substantially all of its assets through a Chapter 11 plan for $1 billion to funds and accounts to be designated by Cerberus Capital Management, LP.

The term sheet provides a package of recovery for unsecured creditors, including $10 million in cash, avoidance actions not being purchased by Cerberus and a commitment from Cerberus to fund up to $2 million of the costs and expenses of the unsecured creditor liquidating trust.

According to a company news release, the plan also provides for payment in full of secured claims, including obligations under Tower's debtor-in-possession credit facility and second-lien loan facility, as well as payment in full of administrative and priority claims; and assumption of the company's pension plan.

Plan creditor treatment

Treatment of creditors under the plan will include:

• Holders of other priority claims and other secured claims will receive payment in full in cash from a post-consummation trust priority account;

• Holders of second-lien claims will receive cash payment in full from the second-lien collateral account and the second-lien facility will be terminated;

• Holders of R.J. Tower bondholder claims and R.J. Tower general unsecured claims will receive their share of the R.J. Tower primary and secondary recovery, provided, however, that these creditors will not receive any distribution until after all post-consummation trust senior claims have been paid in full;

• Holders of 5.75% convertible senior note claims will receive a share of the class 6 recovery, provided, however, that these creditors will not receive any distribution until after all post-consummation trust senior claims have been paid in full;

• Holders of general unsecured claims will receive a share of the class 7 recovery, provided, however, that these creditors will not receive any distribution until after all post-consummation trust senior claims have been paid in full; and

• Holders of trust related claims, intercompany claims and equity interests will receive no distribution under the plan.

Tower said a court-approved marketing process is being conducted under which competing bids for the assets must be submitted by June 20.

The auction will be held June 25, and the company said it would then ask the court to confirm its plan of reorganization and sale, with closing to occur by July 31.

Tower said it expects more than half of the restructured company's revenue to come from its international operations.

According to a Monday court filing, if Tower was able to file its plan by May 1, its exclusive period to file a plan of reorganization would be extended to June 6 and its exclusive vote solicitation period to July 11.

Tower, a Novi, Mich.-based auto parts maker, filed for bankruptcy on Feb. 1, 2005. Its Chapter 11 case number is 05-10578.

© 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.