UTEX files pre-packaged plan; confirmation hearing set for Oct. 23

By Sarah Lizee

Olympia, Wash., Oct. 9 – UTEX Industries Inc. and its affiliates filed Chapter 11 bankruptcy and submitted a pre-packaged plan of reorganization and related disclosure statement on Thursday in the U.S. Bankruptcy Court Southern District of Texas.

A combined hearing on the disclosure statement and plan is set for Oct. 23.

Plan terms

According to the disclosure statement, holders of other priority claims will be paid in full in cash.

Holders of other secured claims will receive payment in full in cash or have their claims reinstated.

Holders of first-lien credit agreement claims will receive their pro rata share of (a) 96% of the new equity interests issued under the plan on the effective date, subject to dilution by the new equity interests issued under the management incentive plan and the new warrants and (b) the exit second out term loans.

Holders of second-lien credit agreement claims will receive their pro rata share of (a) 4% of the new equity interests issued under the plan on the effective date, subject to dilution by the new equity interests issued under the management incentive plan and the new warrants and (b) the new warrants.

The debtors will continue to pay or dispute each general unsecured claim in the ordinary course of business as if the Chapter 11 cases had never been commenced.

Intercompany claims will be paid, adjusted, continued, settled, reinstated, discharged or eliminated.

Intercompany interests will be deemed to be in full force and effect.

Existing equity interests will be cancelled with no distribution.

Interim DIP financing

The company also received interim court approval to access a $25 million senior secured debtor-in-possession loan with Alter Domus as administrative and collateral agent.

Interest on the loan is Libor plus 900 basis points, subject to a 1.5% Libor floor.

The loan will mature four months from the petition date.

The company also received interim approval to access cash collateral.

Restructuring support

As previously reported, the company entered into a restructuring support agreement with the majority of its lenders on the terms of a comprehensive pre-packaged restructuring.

UTEX said the restructuring transaction will reduce its funded debt by roughly $700 million and will provide UTEX with up to $42.5 million in new financing, according to a press release.

UTEX was expected to complete the process through the pre-packaged restructuring.

In connection with the financial restructuring, Houlihan Lokey is serving as financial adviser and investment banker, AlixPartners is serving as restructuring adviser, and Weil, Gotshal & Manges LLP is serving as legal adviser to UTEX.

Debt details

In its petition, the company listed $100 million to $500 million in assets and $500 million to $1 billion in liabilities.

UTEX did not list any unsecured creditors with claims of $1 million or more.

UTEX is a Houston-based manufacturer of engineered sealing and other specialty products used in oil and gas drilling and production, power, mining, water treatment and other industrial sectors. The Chapter 11 case number is 20-34932.

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