U.S. Shipping Partners emerges from pre-packaged Chapter 11 bankruptcy

By Caroline Salls

Pittsburgh, Nov. 13 - U.S. Shipping Partners LP emerged from Chapter 11 bankruptcy when its plan of reorganization took effect on Thursday, according to an 8-K filed with the Securities and Exchange Commission.

The plan was confirmed on Oct. 1 by the U.S. Bankruptcy Court for the Southern District of New York.

Under the plan:

• The company's senior lenders will receive $240 million of senior secured term notes due Aug. 7, 2013, $60 million of junior secured term notes due Aug. 7, 2013, 50% of the common stock in the reorganized company and contingent payment rights entitling the holders to payments of $55.5 million following payment in full of the senior and junior secured term notes.

The senior notes will bear interest at Libor plus 720 bps, subject to a 2% Libor floor, and the junior notes will bear interest at Libor plus 50 bps, subject to a 2% Libor floor.

Payments must be made on the CVRs before any dividends or distributions can be made on the new common stock;

• The holders of the company's 13% senior secured notes due 2014 will receive 50% of the common stock of the reorganized company, provided that noteholders that are not U.S. citizens will receive a combination of common stock and warrants due Dec. 31, 2029;

• The reorganized company will adopt a management equity plan providing for the issuance to management of 10% of the new common stock, 50% of which will be issued at the time of emergence, with 25% vesting immediately and an additional 25% vesting on the first, second and third anniversaries of the plan effective date.

The remaining 50% available under the management equity plan will be issuable from time to time as determined by the company's board of directors; and

• The existing common units, subordinated units and general partnership interests will be cancelled without the payment to the holders.

U.S. Shipping is an Edison, N.J.-based provider of long-haul marine transportation services. It filed for bankruptcy on April 30, 2009. Its Chapter 11 case number is 09-12711.

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