United Subcontractors' disclosure statement OK'd; plan hearing June 25

By Caroline Salls

Pittsburgh, May 21 - United Subcontractors, Inc.'s disclosure statement was approved Thursday by the U.S. Bankruptcy Court for the District of Delaware.

The confirmation hearing is scheduled for June 25.

As previously reported, the company entered bankruptcy to implement an agreement in principle with holders of its first-lien loan due in 2012 and second-lien loans due in 2013 on the terms of a financial restructuring.

The proposed restructuring is expected to reduce the company's funded debt by $314 million through a conversion of the bulk of that debt to 100% of the equity in the reorganized company.

Under the terms of the proposed plan of reorganization, all letters of credit will remain in place during and after the bankruptcy.

Specific plan creditor treatment will include:

• Holders of $5 million in administrative claims, $500,000 in priority tax claims and $3.5 million in miscellaneous priority claims will recover 100% in cash;

• Holders of subsidiary interests will retain their interests, but will receive no distribution under the plan;

• Holders of $14.2 million in general unsecured claims will recover 100% either in cash or through reinstatement of their claim;

• Holders of $290.1 million in first-lien secured claims will receive their share of 96% of the new common stock in the reorganized company and $22.5 million of new six-year senior secured notes;

• Holders of $66.45 million in second-lien secured claims will receive their share of 4% of the new common stock in the reorganized company;

• Holders of $2 million in rejection claims will recover 5% through their share of the lesser of $125,000 and 5% of the total amount of all rejection claims; and

• Holders of old USI Holdings common stock and interests and insider claims will receive no distribution under the plan.

The company said it expects to be able to fund its post-emergence operations and plan distributions using cash receipts without the need for exit financing, but it is evaluating the possibility of the need for additional financing.

United Subcontractors, an Edina, Minn.-based installer of residential and commercial insulation systems and provider of related products and services, filed for bankruptcy on March 31. The Chapter 11 case number is 09-11150.

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