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17-Jun-10
12:23
Chemtura exclusivity extended, equity
outlines USD 1.85bn alternative plan with UBS
financing
Story:
Chemtura’s exclusivity extension was approved at
a hearing today in the Bankruptcy Court for the
Southern District of New York. The debtor’s counsel
claimed a plan of reorganization will be filed as
early as this afternoon, but the company still needs
additional time to finalize environmental liability
and toxic tort settlements.
Natasha Labovitz from Kirkland & Ellis also added
that the POR has the majority support of creditors.
The bankrupt chemical manufacturer pushed
exclusivity to 17 November from the earlier 11
August deadline.
The company’s POR is expected to call for the full
equitization of Chemtura’s USD 1.15bn senior
unsecured notes. However, share holders led by
Canyon Capital and Strategic Value Partners are
not on board. Counsel for the official equity
committee said the group is ready to file its own
POR in the next two weeks.
Skadden Arps attorney Jay Goffman, representing
the equity committee, said his constituents are
ready to roll out an alternative plan based on USD
1.85bn of new financing that preserves equity and
makes creditors whole. Goffman added that the
group’s advisor UBS is able to finance their plan by
raising USD 1.35bn of debt on top of a USD 500m-
USD 600m rights offering funded by share holders
and new investors.
The outline of the share holder plan caught some
flak from attorney Richard Wynne of Jones Day,
representing a Harbinger and York Capital led ad
hoc group of note holders claiming to hold 70% of
Chemtura’s debt. “The equity has had a long time
to come up with a proposal to pay creditors,”
Wynne said. “It hasn’t been a secret they’re trying
to raise money. They haven’t come up with it. They
haven’t come up with a capital structure that
makes sense.”
Chemtura common shares traded at USD 0.95 this
morning, down from USD 1.60 on 26 May. The
company’s USD 500m 6.875% senior notes due
2016 and its USD 375m 7% senior notes due 2009
– both issued out of more valuable operating
subsidiaries – have been trading around 108-109
for the past month, according to MarketAxess.
Meanwhile, the debtor’s USD 150m 6.875% senior
notes due 2026 – the class with the least valuable
holdco guarantors – are gradually creeping up, last
trading at 99.5 today from 97.5 on 8 June.
by Andrew Ragsly
Source: Debtwire
Intel. Grade: Strong evidence
Intelligence ID: 996727
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