Noteholders of Vitro SAB, Mexico’s largest glassmaker, turned down the latest offer to restructure $1.2 billion in debt that’s been in default for 15 months.
Vitro announced yesterday morning that it made a “revised counterproposal” to an ad hoc group holding $500 million in face amount of the three issues of notes. Vitro didn’t disclose terms of the offer.
Late yesterday afternoon the ad hoc noteholder group issued a statement saying they rejected the proposal. The noteholders believe the offer “continues to undervalue the financial condition of Vitro’s business.” The debt holders also see the offer as intended to “redistribute value away from Vitro’s creditors to its shareholders.”
The creditors’ statement concluded by saying that the noteholders are “reviewing the exercise of appropriate remedies and options.”
Monterrey, Mexico-based Vitro, in its announcement early yesterday, said it hoped to begin a consent solicitation in early August.
Vitro first missed interest payments on the notes in February 2009. The noteholders since then have accelerated the debt, making it all due and payable.
Updates
Lehman’s Cash Increases to $18.92 Billion in June
Lehman Brothers Holdings Inc. had $18.92 billion cash at the end of June, the holding company for the liquidating broker said in a monthly operating report filed late yesterday. Cash rose by about $525 million during the month.
Cash receipts in the month were $1.9 billion.
Lehman Brothers Special Financing Inc. led the Lehman companies with $7.4 billion cash. In second place was Lehman Commercial Paper Inc. with $3.3 billion, followed by the holding company with $2.1 billion.
Professional fees since the case began now total $873 million, including $42.7 million in June.
Alvarez & Marsal LLC, the financial advisers, billed $15.6 million in June, bringing the total since September 2008 to $311.6 million. The fees for Weil Gotshal & Manges LLP, chief bankruptcy counsel, now total $200.6 million, including $9.8 million in June. Attorneys for the official creditors’ committee from Milbank Tweed Hadley & McCloy LLP have been paid $56.5 million, including $3.6 million in June.
For details on the revised plan and disclosure statement that Lehman filed in April, click here and here for the April 15 and 16 Bloomberg bankruptcy reports.
The Lehman holding company filed under Chapter 11 in New York on Sept. 15, 2008, and sold office buildings and the North American investment banking business to London-based Barclays Plc one week later. The Lehman brokerage operations went into liquidation on Sept. 19, 2008, in the same court. The brokerage is in the control of a trustee appointed under the Securities Investor Protection Act.
The Lehman holding company Chapter 11 case is In re Lehman Brothers Holdings Inc., 08-13555, while the liquidation proceeding under the Securities Investor Protection Act for the brokerage operation is Securities Investors Protection Corp. v. Lehman Brothers Inc., 08-01420, both in U.S. Bankruptcy Court, Southern District New York Manhattan).
Lexington Precision Confirms Plan in 27-Month Case
The Lexington Precision Corp. reorganization plan was approved at a hearing yesterday when the bankruptcy judge in New York signed a confirmation order.
To confirm the plan, the manufacturer of rubber components for autos and medical devices needed to use the so-called cramdown process because unsecured creditors of the operating company Lexington Rubber Group voted “no.” The plan has the class being paid in full over ten quarterly installments, with interest.
Prior to the confirmation hearing, the creditors’ committee negotiated an improvement in the interest rate to be paid to the class that voted against the plan. With the sweetened plan, the committee didn’t object to confirmation and cramdown.
The plan is partially funded by selling $22 million in stock at $10 a share to Commercial Finance Services 407 LLC.
It reduces debt by more than $50 million while giving holders of senior subordinated notes an estimated 51 percent recovery. Subordinated noteholders, owed $34.18 million in principal, may elect between taking 51 percent in cash or swap for stock at roughly $20 of debt for each new share.
General unsecured creditors of Lexington Precision are estimated to have an 85.4 percent recovery, according to the disclosure statement. They are to have 8 percent in cash on implementation of the plan, with the remainder paid 8.6 percent in cash at each of the ensuing nine quarters. The disclosure statement says that the present value of the payments is 80 percent.
Alternatively, unsecure creditors can elect to receive 51 percent paid in cash.
Asbestos claims are to be paid in full with insurance proceeds. If insurance is insufficient, the remainder will be paid over time like general unsecured creditors. Secured debt under the company’s plan is to be paid in full through revised credit agreements.
Lexington filed for Chapter 11 reorganization in April 2008 when negotiations failed with an ad hoc committee of holders of the senior subordinated notes. The detailed lists of assets and debt show property with a value of $42 million against liabilities totaling $41.3 million, including $36.4 million in secured claims. Revenue in 2008 was $88.5 million. Manhattan- based Lexington has three plants and more than 650 workers.
The case is In re Lexington Precision Corp., 08-11153, U.S. Bankruptcy Court, Southern District New York (Manhattan).
Chemtura Reorganization Plan Will Go to Creditors for Vote
The bankruptcy judge told chemical maker Chemtura Corp. at a hearing yesterday that he will approve a disclosure statement explaining the Chapter 11 plan after changes are made.
The judge also denied a motion where the official equity committee sought permission to file a competing plan of its own. The hearing for approval of a so-called plan-support agreement was put off until Aug. 4. The shareholders are objecting to the agreement where the creditors’ committee and an ad hoc group of bondholders bind themselves to support the reorganization plan originally filed in June.
For Bloomberg coverage of yesterday’s hearing, click here.
Chemtura’s plan, supported by the creditors’ committee and the ad hoc bondholder group, is designed to pay creditors in full while holding the possibility of preserving some value for existing shareholders. The plan would reduce debt for borrowed money from $1.3 billion to approximately $750 million. For details, click here for the June 18 Bloomberg bankruptcy report.
The Chapter 11 petition in March 2009 by Middlebury, Connecticut-based Chemtura listed assets of $3.06 billion against debt totaling $2.6 billion, including $1.02 billion owing on three issues of notes and debentures. Sales in 2008 of $3.5 billion declined to $2.5 billion in 2009. The subsidiaries outside of the U.S. didn’t file.
The case is Chemtura Corp., 09-11233, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
Tronox Reports $600,000 Net Loss in June, Sales $61.3 Million
Tronox Inc., the world’s third-largest producer of the white pigment titanium dioxide, reported a $600,000 net loss in June on net sales of $61.3 million. Interest expense was $2.8 million while reorganization items were $9.1 million.
At yesterday’s hearing, Tronox said it’s officially rejecting an agreement governing the spinoff from Kerr-McGee Corp. Tronox had said that Kerr-McGee and its parent Anadarko Petroleum Corp. were trying to “throw a wrench” into the reorganization by attempting to force an assumption of the agreement.
The agreement is a bone of contention in the lawsuit where Tronox is hoping to recover environmental remediation costs it was given when spun off from Kerr-McGee in March 2006. Tronox contends the agreement was an element of a larger fraudulent transfer.
Tronox filed a reorganization plan earlier this month where unsecured creditors with an estimated $471 million in claims will realize a recovery between 80 percent and 100 percent by receiving most or all of the new common stock. The hearing for approval of the explanatory disclosure statement is set for Aug. 10.
To read details on the plan, click here for the July 16 Bloomberg bankruptcy report.
The Chapter 11 petition by Tronox in January 2009 listed assets of $1.56 billion against debt totaling $1.22 billion. Debt includes $213 million on a secured term loan and revolving credit, $350 million in 9.5 percent senior notes, and a $40.7 million accounts receivable securitization facility. Tronox’s products are used in paints, coatings, plastics, paper and consumer products. The operations outside of the U.S. didn’t file.
The case is In re Tronox Inc., 09-10156, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
Madoff Trustee Adds 43 Defendants to Fairfield Suit
The trustee for Bernard L. Madoff Investment Securities Inc. added 43 new defendants to a $3.5 billion lawsuit he began in May 2009 against three hedge funds managed by Fairfield Greenwich Group. The new defendants include the group’s co- founder Walter Noel. To read Bloomberg coverage, click here.
The funds themselves discharged Fairfield Greenwich as manager and are in liquidation in the High Court of Justice in the British Virgin Islands. The liquidators for the funds filed Chapter 15 petitions in New York in June.
The Madoff trustee said in court filing last week that he won’t oppose the Chapter 15 petitions because the liquidators agreed the automatic stay won’t “impede” his actions against the funds.
The trustee’s original suit sought to recover $3.54 billion, including $3.2 billion withdrawn within six years and $1.2 billion taken out in 90 days before bankruptcy.
Bernard Madoff is serving a 150-year prison sentence following a guilty plea. The Madoff firm began liquidating in December 2008 with the appointment of a trustee under the Securities Investor Protection Act. Bernard Madoff himself went into an involuntary Chapter 7 liquidation in April 2009. His bankruptcy case was consolidated with the firm’s liquidation.
The Fairfield Chapter 15 case is In re Fairfield Sentry Ltd., 10-13164, U.S. Bankruptcy Court, Southern District New York (Manhattan). The Madoff liquidation case is Securities Investor Protection Corp. v. Bernard L. Madoff Investment Securities Inc., 08-01789, U.S. Bankruptcy Court, Southern District of New York (Manhattan). The criminal case is U.S. v. Madoff, 09-cr-00213, U.S. District Court, Southern District of New York (Manhattan).
National Envelope-Cenveo Bidding Compromise Possible
The creditors’ committee for National Envelope Corp. proposed a compromise it hopes will enable to Cenveo Corp. to receive financial information and participate in an auction.
National Envelope, which calls itself the largest closely held envelope manufacturing company in the U.S., has a hearing today to set up auction procedures where Gores Group LLC is already under contract to pay $134.5 million. Cenveo has been objecting, saying the sale process so far has been “designed to exclude Cenveo and bidders like it.”
The committee, in July 20 papers, said it understands National Envelope’s concern that Cenveo, a major competitor, may not have financial resources to complete an acquisition. To resolve the uncertainty, the committee proposes that Cenveo procure a letter from its lenders saying that use of the credit facilities and cash won’t violate loan covenants.
Cenveo has been saying that it would bid more than Gores.
National Envelope filed under Chapter 11 on June 10. It wants bids initially by Aug. 16, followed by an auction on Aug. 20 and an Aug. 23 hearing for approval of the sale.
National Envelope’s loan agreement, with General Electric Capital Corp. as agent, required having a sale agreement by July 2 and approval of sale procedures by July 16.
NEC, based in Uniondale, New York, has 14 manufacturing plants in 11 states, plus three warehouses. Net sales in 2009 were $676 million, resulting in a $44.2 million net loss. The petition says assets and debt are both less than $500 million. Liabilities include $74.3 million on a secured term loan, $70.6 million on a secured revolving credit, and $89 million owing on unsecured debts to trade suppliers.
The case is In re NEC Holdings Corp., 10-11890, U.S. Bankruptcy Court, District of Delaware (Wilmington).
Cabi Downtown Committee Settles, Supports Reorganization Plan
The creditors’ committee for Cabi Downtown LLC settled its disputes and agreed to support a modified Chapter 11 plan resulting from a settlement between the lender and the owner of the 49-story Everglades on the Bay condominium in Miami.
The plan allows Bank of America NA, the construction lender, to take title to the project while the developer remains as manager. The Charlotte, North Carolina-based bank is owed $207 million. The confirmation hearing for approval of the plan will take place in October.
General unsecured creditors were to share $750,000 cash, although only if they voted in favor of the plan. If the class voted “no,” they were to receive $500,000.
The committee objected and hammered out a revised plan, Michael S. Budwick, counsel for the creditors’ committee, said in an interview. Budwick is from Meland Russin & Budwick PA.
The plan now provides for unsecured creditors to receive $750,000, for a 25 percent recovery on $3 million in claims. The plan was also revised so that large, disputed claims wouldn’t dilute the recovery by unsecured creditors.
Budwick said the settlement was an “extraordinary result. Typically unsecured creditors in these circumstances receive nothing.”
Prior to settlement, Cabi had a plan where Bank of America was being offered a five-year secured note with 2.5 percent interest paid in cash. The interest rate would have been the London interbank offered rate plus 2.5 percent, with the difference paid in more debt. Believing the prior plan was unconfirmable, the bank had filed a motion to dismiss the Chapter 11 case.
Cabi filed for Chapter 11 reorganization in August 2009, just after the bank began foreclosure.
The company is owed by GICSA, which says it is the largest and most profitable real estate developer in Mexico.
The case is In re Cabi Downtown LLC, 09-27168, U.S. Bankruptcy Court, Southern District Florida (Miami).
Statistics
Liquidity Deteriorating Among Junk-Rated Companies
Liquidity among the lowest junk-rated companies is beginning to deteriorate for the first time in 15 months, Moody’s Investors Service said in a report yesterday.
Moody’s liquidity-stress index for the lowest junk-rated companies increased to 5.5 percent in mid-July. It was 5 percent at the end of June and 4.8 percent in May.
Moody’s estimates that companies with junk debt are facing $800 billion in maturities through 2014.
June 2007 was the last time Moody’s liquidity-stress index began to deteriorate. The index peaked at 21 percent in March 2009 and declined every month until June.
The index, at 5.5 percent, is still low by historical standards, Moody’s said. The average since 2002 is 8.4 percent.
New Filing
Albuquerque Movie Studio Files to Reorganize in California
Pacifica Mesa Studios LLC, the owner of a movie studio in Albuquerque, New Mexico, filed a Chapter 11 petition on July 20 in Woodland Hills, California, listing assets of $47.3 million against debt totaling $104.5 million.
The studio, known as Albuquerque Studios or ABQ Studios, has an $80 million first mortgage and a $23 million second mortgage. Pacifica says in court papers that the property is worth $54 million.
The lender on the first mortgage is Longview Ultra I. The second-lien lender is Workers Realty Trust II LP. The company is owned by Dana Arnold and Hal Katersky, according to a court filing along with the petition.
For other Bloomberg coverage, click here.
The case is In re Pacifica Mesa Studios LLC, 10-18827, U.S. Bankruptcy Court, Central District California (Woodland Hills).
Briefly Noted
General Growth Summerlin Disputes in Court Today
General Growth Properties Inc. has a hearing today where the bankruptcy judge will decide whether he or an arbitration panel will decide what former investors in Hughes Corp. should receive in the Chapter 11 plan. For Bloomberg coverage, click here to read today’s feature story. Click here and here for discussions of the bankruptcy issues from the June 21 and July 1 Bloomberg bankruptcy reports.
General Growth’s property-owning subsidiaries already have confirmed Chapter 11 plans paying their creditors in full. The four top-tier companies filed a plan this month also promising full payment while preserving some of the stock for existing shareholders. The plan is financed with an $8.55 billion debt and equity commitment from a group led by Brookfield Asset Management Inc. Teacher Retirement System of Texas has a separate commitment to buy $500 million of new stock at $10.25 a share.
General Growth hopes to emerge from reorganization in October, remaining the second-largest mall owner in the U.S. with 180 properties in 43 states.
General Growth began the largest real-estate reorganization in history by filing under Chapter 11 in April 2009. The books of Chicago-based General Growth had assets of $29.6 billion and total liabilities of $27.3 billion as of Dec. 31, 2008.
The case is In re General Growth Properties Inc., 09-11977, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
Texas Rangers Hearing on Auction Date Continues Today
The hearing consumed another day yesterday on whether the auction for the Texas Rangers baseball team should go ahead on schedule. The hearing continues today. For Bloomberg coverage, click here.
The Rangers filed under Chapter 11 on May 24 with a contract selling the team to a group including current team President Nolan Ryan and sports lawyer Chuck Greenberg. The price was raised to $306.7 million cash. The lenders would recover $256 million, according to the team’s disclosure statement based on the original contract for $304 million. The Rangers moved from Washington to Texas in 1972. The team defaulted on payments owing to the lenders in March 2009. Michael “Buzz” Rochelle, a brother of Bloomberg reporter Bill Rochelle, is a lawyer for an agent for the lenders. The partnership that owns the team is Texas Rangers Baseball Partners.
The case is In re Texas Rangers Baseball Partners, 10- 43400, U.S. Bankruptcy Court, Northern District of Texas (Fort Worth).
Point Blank Reports $1.09 Million Operating Loss in June
Point Blank Solutions Inc., a manufacturer of soft body armor for the military and law enforcement, reported a $1.11 million net loss in June on net sales of $6.46 million. The operating loss in the month was $1.09 million. Reorganization items were $545,000.
Point Blank has a plant and head office in Pompano Beach, Florida, and a second plant in Jacksboro, Tennessee. Revenue in 2009 was more than $153 million. The petition listed assets of $64 million against debt totaling $68.5 million. Debt included a $10.5 million secured loan to be paid off by financing for the Chapter 11 case. Point Blank said it also owes $28.2 million to trade suppliers. Three former officers were indicted on charges of securities fraud.
The case is In re Point Blank Solutions Inc., 10-11255, U.S. Bankruptcy Court, District of Delaware.
South Bay Express Loses $3.05 Million in June
South Bay Expressway LP, the owner of a nine-mile toll road near San Diego, generated $1.99 million revenue in June, resulting in a $3.05 million net loss in view of $3.88 million in depreciation, amortization, legal costs, and $1 million in so-called adequate protection for secured lenders.
The expressway opened in November 2007. It owes $340 million on a first-lien construction and term loan plus another $170 million first-lien obligation on a loan provided by the U.S. Transportation Department. Ownership of the toll road is controlled by affiliates of Sydney-based Macquarie Group Ltd.
The case is In re South Bay Expressway LP, 10-04516, U.S. Bankruptcy Court, Southern District California (San Diego).
Daily Podcast
WaMu, Texas Rangers, Innkeepers Trust: Audio
Atypical events in the Washington Mutual reorganization, the new bankruptcy judge handling newly filed Innkeepers USA Trust, and developments in the Texas Rangers reorganization are discussed in the latest bankruptcy podcast on the Bloomberg terminal and Bloomberglaw.com. To listen, click here.
To contact the reporter on this story: Bill Rochelle in New York at wrochelle@bloomberg.net.
To contact the editor responsible for this story: David E. Rovella at drovella@bloomberg.net.
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