Local Insight Media Holdings Inc, the fifth-largest Yellow Pages publisher in the U.S., and affiliate Caribe Media Inc., a publisher of directories in Puerto Rico and the Dominican Republic, each won court approval of their restructuring plans.
U.S. Bankruptcy Judge Kevin Gross approved both of the separate plans at a combined hearing today in Wilmington, Delaware. “This is a major accomplishment,” Gross told the lawyers, adding that they are “well situated to go forward with success.”
Local Insight and Caribe, whose bankruptcy cases weren’t consolidated, shared attorneys for the reorganizations which eventually proceeded on a parallel process.
The combined plans result in the “consensual elimination of more than $1 billion” in debt, Ross M. Kwasteniet, a lawyer representing both companies, told Gross at the hearing. The plans were “overwhelmingly supported” by creditors, with more than 95 percent of all creditor groups allowed to vote electing to accept the plans.
Under Local Insight’s reorganization plan lenders owed about $339.3 million will get all of the equity in reorganized Local Insight Regatta Holdings Inc., which operates one of its three main businesses.
Local Insight sought bankruptcy protection last November to preserve its ability to challenge the lender’s security in its assets.
The lenders also have the right to participate in a $35 million exit facility for a projected recovery of about 20 cents to 28 cents on the dollar, according to court documents.
Unsecured creditors owed more than $5 million will get cash for a recovery of about 13 percent.
Noteholders of Local Insight Regatta, owed about $221.2 million, and creditors of other bankrupt affiliates owed more than $300 million aren’t expected to receive a recovery, court papers show.
Local Insight, which is majority owned by private-equity firm Welsh, Carson, Anderson & Stowe, has about 870 print directories and operates about 30 Internet Yellow Pages directories.
Caribe, one of the three main operating businesses, is indirectly owned by Englewood, Colorado-based Local Insight.
Caribe’s senior secured lenders, owed about $127 million, will get all of the reorganized company’s equity and share in a $55 million exit loan, according to its restructuring plan. The lenders are projected to receive a recovery of 77 cents to 93 cents on the dollar.
Subordinated noteholders owed about $58.6 million won’t receive any recovery under the plan.
Caribe sought bankruptcy protection in May, so its lenders could pursue $44.2 million they claim was wrongly transferred to affiliates as dividend payments. The lenders claims were resolved through the restructuring plan.
The company, based in San Juan, Puerto Rico, listed as much as $500 million each in assets and liabilities, with about $184 million in funded debt.
Caribe’s main operating units provide directory services to Puerto Rico and the Dominican Republic, controlling 80 percent and 98 percent of the market respectively, court papers show.
The Local Insight case is In re Local Insight Media Holdings Inc., 10-13677, and the Caribe case is In re Caribe Media Inc., 11-11387, U.S. Bankruptcy Court, District of Delaware (Wilmington).