garys board

[ddninja]

RHIEQ - RHIE >>> RHI Reorganization Plan Approval Delayed Until March
By Don Jeffrey - Feb 17, 2011 10:46 PM GMT+0100

RHI Entertainment Inc., the bankrupt developer of movies made for television, received court permission to delay approval of its reorganization plan while negotiations continue with its principal lender.

U.S. Bankruptcy Judge Stuart Bernstein said today in court in Manhattan that he will hold a hearing to confirm the company’s plan on March 29. Bernstein also approved three settlement agreements between RHI and lenders that provided financing for films.

“These are enormously complex settlement agreements involving numerous parties,” Bernstein said. “They will substantially reduce the debtor’s liabilities.”

RHI, based in New York, filed for Chapter 11 creditor protection in December saying that a weak economy made it “unable to license new movies and mini-series at prices that would cover the production and debt costs.” RHI filed a prepackaged reorganization plan negotiated with creditors before it sought Chapter 11 protection. JPMorgan Chase & Co. is RHI’s principal secured lender.

The issue that delayed confirmation was the secured lender’s requirement that RHI not exceed a cap on claims, set at $2.9 million, D.J. Baker, a lawyer for RHI, told the judge.

“They are still in the process of reviewing the claims,” Baker said. “We believe we will be significantly under that, and all unsecured claims will be paid in full.”
New Loan

The reorganization plan would give the holders of about $515 million in first-lien debt a new $300 million term loan and 99 percent of the company’s new stock. Holders of about $75 million of second-lien debt would receive 1 percent of the new stock and warrants representing as much as 15 percent of the shares.

The three settlement agreements approved today will give the companies that financed certain films, including U.S. Bank NA, ownership and future revenue from them.

In exchange, the lenders will forgive more than $60 million they are owed, Baker said. RHI will retain the right to distribute the films to television networks such as Walt Disney Co.’s ABC. The films include “Black Swarm,” “Dragonsteel” and “Rise of the Gargoyles.”

One objection remains to the plan, from the U.S. Trustee appointed by the Justice Department to oversee Chapter 11 cases. The trustee said the plan improperly releases certain parties from any claims that might arise against them.

“We hope to resolve that,” Baker told the judge.
RHI Shares

RHI won approval in January of a $15 million revolving credit facility provided by New York-based JPMorgan to finance operations while reorganizing.

The hearings to approve the reorganization plan and the disclosure statement, which outlines the plan, will be held at the same time because the restructuring was negotiated before the Chapter 11 filing and creditors voted in favor of it.

RHI doubled, rising 1.5 cents to 3 cents at 3:45 p.m. New York time in over-the-counter trading. The shares had fallen 28 percent this year before today.

The case is In re RHI Entertainment Inc., 10-16536, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Don Jeffrey in New York at [e-mail].

To contact the editor responsible for this story: John Pickering at [e-mail]

http://www.bloomberg.com/news/2011-02-17/rhi-reorganization-plan-approval-delayed-until-march-update1-.html