Union Acceptance noteholders to receive 100% recovery through new notes

New York, June 5 - Union Acceptance Corp. noteholders are expected to receive 100% recovery of their claims under the company's proposed reorganization plan.

In addition, the company's existing stockholders will be unimpaired, retaining their equity interest in the company.

Union Acceptance, an Indianapolis specialized financial services firm, filed its reorganization plan with the U.S. Bankruptcy Court for the Southern District of Indiana.

Holders of the company's 7.75% senior notes due Dec. 27, 2002, 7.97% senior notes due Dec. 27, 2002 and 12% senior notes due April 30, 2007, with $54.9 million in claims, will receive new senior notes, giving them 100% recovery. The new senior notes will have a principal amount equal to the principal and interest owed on the old notes and will pay interest at 350 basis points over the six-month Treasury bill. The claim is expected to be paid over seven months.

Holders of the company's 9.99% senior subordinated notes due March 30, 2003, with $46.4 million in claims, will receive new subordinated notes, also giving them 100% recovery. The new subordinated notes will have a principal amount equal to the principal and interest owed on the old notes and will pay interest at 350 basis points over the two-year Treasury note.

Available cash will also be distributed to noteholders.

Union Acceptance filed for Chapter 11 on Oct. 31, 2002.

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