Advanced Lighting reaches agreement with creditors on reorganization plan, will exchange notes

By Carlise Newman

Chicago, June 4 - Advanced Lighting Technologies, Inc. said it reached an agreement in principle with the official committee of unsecured creditors and General Electric Co. terms for an amended joint plan of reorganization. The company has also filed for court approval of a replacement debtor-in-possession credit facility that would not require the company to sell assets.

Under the plan, the $100 million 8% senior notes and unpaid interest due will be exchanged for $40 million new 8% senior notes due 2008. Noteholders will also receive 79.2% of the company's common stock. The preferred shareholder, GE, will receive 11.6% of the common stock and incentives for certain incremental business and cost savings initiatives.

In the prior plan, senior noteholders were to receive $43 million of 8% notes, $60 million in preferred stock, and 5% common stock. Bank lenders, subordinated noteholders, and those with unsecured claims were to be paid in full in a common exchange.

Advanced Lighting will establish an incentive plan for key managers which would have shares available equal to 9.2% of the common stock. Holders of the company's common stock, including holders of existing warrants and options, will receive $2.85 million, minus the professional fees of up to $350,000 incurred by the committee representing the common shareholders.

After the restructuring, the Solon, Ohio-based lighting manufacturer will no longer be a publicly held company and will no longer be required to file reports with the Securities and Exchange Commission.

In other developments, the debtors have filed a motion with the bankruptcy court for approval of a replacement secured revolving and term debtor-in-possession credit facility. The replacement facility, with an anticipated closing fee of $550,000 would allow the debtors to complete the filings related to the amended plan and to seek approval of the amended plan without the requirement in the existing DIP to sell assets of the company prior to reorganization.

The replacement DIP will provide similar total availability to the existing bank facilities at a similar interest rate. The facility must be replaced at the time of emergence from bankruptcy proceedings or Oct. 31, whichever occurs first. The former DIP was $26 million in size and carried interest at prime plus 300 basis points.

The debtors expect that the lenders under the replacement debtor-in-possession facility will make replacement financing available at the time of the Debtors' emergence from bankruptcy proceedings.

The amended plan, amended disclosure statement and other definitive documents have not yet been completed or filed with the bankruptcy court.

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