Blackstone Group LP, the world’s largest buyout firm, agreed to invest $500 million in General Growth Properties Inc. as part of its restructuring plan as the U.S. Securities and Exchange Commission opened a formal insider- trading probe of some of the mall owner’s officials.
Blackstone reached the deal with the investor group financing the plan, General Growth said in a revised reorganization proposal filed yesterday in U.S. Bankruptcy Court in New York. General Growth received notice in July that the SEC is investigating possible insider-trading violations by current and former officers and directors.
General Growth, the second-largest mall owner in the U.S., is scheduled to seek court permission this week to send the reorganization plan to creditors for a vote. Blackstone, based in New York, would get new common stock and shares in a new company that General Growth will spin off when it exits bankruptcy, according to court papers.
General Growth, based in Chicago, described Blackstone’s participation as a “potential” investment in an earlier version of the plan. In the new version, General Growth also agreed to issue new notes to replace certain so-called Rouse notes. The company previously planned to reinstate $1.35 billion worth of the debt.
David Keating, a General Growth spokesman, couldn’t immediately comment on the terms of the new notes.
The case is In re General Growth Properties Inc., 09-11977, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
Apex Digital Files for Reorganization in Los Angeles
Apex Digital Inc., one of America’s leading providers of Apex Digital-branded televisions, sought bankruptcy protection from creditors to modify its business model.
The closely held Walnut, California-based company listed as much as $50 million in both assets and debt in Chapter 11 documents filed yesterday in U.S. Bankruptcy Court in Los Angeles.
“This restructuring plan allows Apex to grow its business in a new direction capitalizing on the increasing demand for green energy. This is an area where we have a proven track record and a number of new products under development,” David Ji, Apex Digital’s Chief Executive Officer, said in statement yesterday.
The company said in the statement it will seek approval of a restructuring plan that will allow it to modify its business strategy to expand its consulting business and grow its green energy lighting products line. The company said it has adequate working capital to continue business operations normally.
Apex Digital, founded in 1997, provides and markets consumer electronics, including high-definition LCD televisions, home entertainment media devices, solar powered lights and digital set top boxes. The trademark “Apex Digital” is owned and licensed by independent third parties not affected by the Chapter 11 petition, according to the statement.
The case is In re Apex Digital Inc., 10-44406, U.S. Bankruptcy Court, Central District of California (Los Angeles).
L&H Trucking Company Files for Chapter 11 Bankruptcy Protection
L&H Trucking Company Inc., a Central Pennsylvania trucking company, sought bankruptcy protection from creditors without giving a reason.
The company, based in Hanover, Pennsylvania, listed debt from $10 million to $50 million and assets from $1 million to $10 million in Chapter 11 documents filed Aug. 16 in U.S. Bankruptcy Court in Harrisburg.
L&H Trucking, founded in 1960 by Larry and Helen Longstreth, grew from a contract carrier service with just a few drivers to a transportation company with more than 165 tractors and 700 trailers, according to its Web site.
The case is In re L&H Trucking Company Inc., 10-06657, U.S. Bankruptcy Court, Middle District of Pennsylvania (Harrisburg).
Visteon Ordered to Reinstate Health Care to Retirees
A judge ordered Visteon Corp. to reinstate health benefits to thousands of retirees who lost insurance coverage after the auto-parts maker filed for bankruptcy.
U.S. Bankruptcy Judge Christopher S. Sontchi said yesterday he will give the company a chance to help him decide how quickly the benefits will be restored to more than 6,000 retirees. The former workers, many of whom held jobs at now-closed Midwest factories, must also be reimbursed for any health-care expenses they incurred since the cuts took place in May, Sontchi said.
Sontchi’s decision follows a July 15 appeals court order that the benefits for 2,100 former workers in Indiana be restored. Sontchi had ruled in December that the company had the right to cancel the coverage without first negotiating with the union. The Indiana workers are covered by yesterday’s ruling.
Visteon, based in Van Buren Township, Michigan, filed for bankruptcy last year, citing the faltering economy and a slowdown in car sales. The company, which makes parts for vehicle interiors, is a former division of Ford Motor Co.
The case is In re Visteon Corp., 09-11786, U.S. Bankruptcy Court, District of Delaware (Wilmington).
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Tribune Creditors Get More Time to Vote on Plan
A judge gave Tribune Co. creditors more time to vote on the publishing company’s plan to exit bankruptcy while it negotiates with opponents.
U.S. Bankruptcy Judge Kevin J. Carey yesterday in Wilmington, Delaware, scheduled a hearing for Aug. 20 to set court dates that may affect the company’s plan to exit bankruptcy this year.
James Conlan, a Tribune attorney, said company officials are talking with creditors who oppose its plan to give more than 90 percent of Tribune to the lenders who financed a 2007 buyout. Lower-ranking creditors who hold $1.2 billion in pre-buyout debt would get nothing under the plan.
Creditors have been reviewing a report by a court-appointed examiner who found evidence of a fraudulent transfer involving part of the deal that real-estate billionaire Sam Zell used to take over Tribune. Creditors are “somewhat likely” to win a lawsuit based on the smaller piece of the $8.3 billion transaction, the examiner said.
Some creditors have said the report will help them decide how to vote on Tribune’s reorganization plan. Carey will take those votes into consideration when he decides whether to approve the plan at a hearing scheduled to start in October.
Depending on how negotiations go this week, that date, along with other related deadlines, may change, Conlan said.
Tribune owns the Los Angeles Times, the Chicago Tribune and television and radio stations. It filed for bankruptcy in December 2008, about a year after the buyout was completed.
The case is In re Tribune Co., 08-13141, U.S. Bankruptcy Court, District of Delaware (Wilmington).
Harrisburg Hires Scott Balice to Help With Debt-Recovery Plan
Harrisburg, the Pennsylvania state capital, hired Scott Balice Strategies to help plan a financial recovery after missing payments on $282 million of debt for an incinerator and considering bankruptcy.
Mayor Linda Thompson, who took office in January, announced the appointment yesterday at a City Hall press conference.
Harrisburg faces $68 million in payments this year on debt tied to the incinerator, which is managed by the Harrisburg Authority. The cost is about four times what the city of 47,000 raises through property taxes annually, according to its budget. Harrisburg and the authority have so far skipped $6 million in loan and bond payments, and have missed two $637,500 loan payments to Covanta Holding Corp., the incinerator operator.
“The Scott Balice Strategies team has the experience and expertise to advise the city at this critical juncture,” Thompson said in a press release. “With their assistance the city will identify and implement the most efficient strategies to maximize value for all of the city’s stakeholders.”
Thompson is struggling to win City Council support for a plan to lease parking garages and meters to a private operator to raise money for debt-service payments.
Scott Balice, based in Chicago, is working on a parking facility lease plan for Pittsburgh. Lois Scott, president of Scott Balice, didn’t immediately respond to e-mail messages and a message left at her Chicago office yesterday.
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The Newark Group Emerges from Chapter 11, Closes on Exit Loans
Newark Group Inc., a manufacturer of recycled paperboard and paperboard products, announced yesterday that it had emerged from bankruptcy protection and closed on its exit loans.
The Cranford, New Jersey-based company won court approval of its reorganization plan July 30, 51 days after seeking bankruptcy protection. The paperboard maker listed from $100 million to $500 million in both debts and assets in Chapter 11 documents when it filed June 9.
“We are pleased to have the continued support of our lenders and stakeholders as we have completed the steps necessary to strengthen our balance sheet so we are poised for sustainable growth,” Robert Mullen, Chief Executive Officer of The Newark Group, said in an Aug. 16 statement. “We emerge from Chapter 11 a well capitalized private company with a much improved operating profile.”
Under the company’s restructuring plan, about $175 million in unsecured subordinated notes were converted into 96.5 percent of the reorganized company’s equity. Trade suppliers and unsecured creditors owed about $57 million were paid in full. Shareholders, with 84 percent of the company’s equity, got 1.5 percent of new common stock plus warrants to buy up to 15 percent. The plan also gave owners of employee stock options up to 2 percent of new stock.
The Newark Group closed on a $70 million revolving loan from Wells Fargo Capital Finance and a $110 million term loan from Orix Finance, as the last step of its restructuring. The exit loans will provide the company with about $25 million in undrawn liquidity, according to the statement.
The case is In Re The Newark Group Inc., 10-27694, U.S. Bankruptcy Court, District of New Jersey (Newark).
Madoff Feeder Fund, Fairfield Sentry, Sues Investors
Fairfield Sentry, an affiliate of Fairfield Greenwich Group, said it had no way to repay the $3.2 billion without getting back the money its shareholders received since about 2004, according to the complaints it filed in U.S. Bankruptcy Court in Manhattan. Fairfield Sentry said it raised money for Madoff without knowing he was running a Ponzi scheme.
Fairfield Sentry is trying to recover more than $160 million in payments it made to shareholders, including Banco Bilbao Vizcaya Argentaria SA, Merrill Lynch Pierce Fenner & Smith Inc. and RBC Dominion Securities Sub A/C.
The biggest claims are being made against Banque Privee Edmond de Rothschild SA for $33.7 million, Meritz Fire & Marine Insurance Co. for $21.9 million and Bank Hapoalim (Suisse) Ltd. for $20 million.
Fairfield Sentry is being liquidated under the supervision of the Commercial Division of the High Court of Justice in the British Virgin Islands.
The first case filed is Fairfield Sentry Ltd. v. Theodoor GGC Amsterdam, 10-03496, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
Nikolaus Bets on Default Surge in Expansion to Distressed Debt
Nikolaus & Co. LLP, a restructuring specialist established in Germany in 2001, is raising as much as $50 million to invest in distressed debt, betting a slowing recovery will lead to “unprecedented” defaults.
“The recent financial environment has created the perfect hunting ground,” said Chief Investment Officer Stefan Benedetti. There will be “a default and restructuring cycle on an unprecedented scale,” he said.
Nikolaus’s Alloro Global Special Situations Fund will be based in London and marks the firm’s first expansion into hedge- fund management. The fund will focus on Europe, the former Soviet Union and Latin America and will target debt sold by telecoms, manufacturing and financial companies.
“I look at the world in terms of whether a company can pay its debt,” Benedetti said. “And if it goes bankrupt I want to know what I can recover from the situation.”
Regency Lenders Said to Consult Lazard on $700 Million of Loans
Regency Entertainment SA’s lenders are consulting financial advisory firm Lazard Ltd. as the Greek casino operator seeks to restructure about 600 million euros ($714 million) of loans.
Regency, which is owned by London-based BC Partners Ltd., is starting discussions with lenders to reorganize its debt, according to three people familiar with the matter. The Athens- based company is being advised by Houlihan Lokey Howard & Zukin, said the people, who declined to be identified because the talks are private.
Andrew Honnor, a London-based spokesman for BC Partners, declined to comment. Andrea Hewitt, a spokeswoman for Houlihan Lokey in London, also wouldn’t comment. Spokesmen for Regency and Lazard couldn’t be reached for comment.
BC Partners acquired Regency in 2006 using a 680 million- euro ($876 million) leveraged-buyout loan arranged by Deutsche Bank AG, according to data compiled by Bloomberg.
Mexicana Pilots Agree to Investors Terms, Horcasitas Says
Grupo Mexicana de Aviacion’s pilots’ union has reached an agreement with new investors to rescue the company, said Communications and Transportation Minister Juan Molinar Horcasitas.
The investors would acquire all of the company’s operations, including the low-cost Click and Link airlines, Horcasitas said in an interview with Radio Formula. The union is working to present a restructuring plan to Mexicana’s creditors, he said.
Blockbuster’s $300 Million Notes Drop to Record Low 4.75 Cents
Bonds of Blockbuster Inc. fell to a record low as the Dallas-based video-rental chain seeks to restructure its debt.
The 9 percent notes due in 2012 fell 3.25 cents to 4.75 cents on the dollar yesterday as of 11:11 a.m. in New York, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The company’s notes have declined from 73.5 cents on the dollar in September, Trace data show.
U.S. Bank TruPS CDO Defaults Pass 14% on July Spike, Fitch Says
Eleven new bank defaults on U.S. bank trust preferred security collateralized debt obligations pushed the Fitch Ratings default and deferral index past the 14 percent mark as of July, according to the latest results.
New defaults totaled $129.5 million last month, affecting 16 CDOs, Fitch said in a statement yesterday. Twenty two banks also began deferring interest payments on about $302.5 million of collateral in 23 trust preferred security CDOs.
The 11 new bank defaults bring the total to 134, affecting 82 CDOs. The 357 banks now deferring are affecting interest payments on $6.5 billion of collateral held by 83 trust preferred security CDOs.
Fitch’s Bank Default and Deferral Index tracks defaults and deferrals by banks and bank holding companies of 85 bank trust preferred security CDOs encompassing approximately $37.7 billion of bank collateral originated. The index includes all types of securities issued by banks and bank holding companies such as trust preferred security and senior and subordinated debt.
European Insurers Pass Sovereign-Debt Default Test, Fitch Says
“Stress-testing of European insurers based on their euro- zone sovereign exposures has resulted in no rating actions,” the firm said in a statement today. Fitch carried out the test “based on the hypothetical scenario of a default on Greek government debt.”
A Europe-wide stress test conducted among banks last month showed that seven of 91 European lenders examined needed to raise capital. Fitch’s scenario for insurers included “knock-on effects on the sovereign debt of Portugal, Ireland, Spain and Italy,” the ratings firm said.
Fitch tested the insurers in its rated portfolio, which includes the majority of the European insurance market and most major European insurance groups.