Warren, NJ, Sept. 24--Formica Corporation has filed its Plan of Reorganization and Disclosure Statement with the U.S. Bankruptcy Court for the Southern District of New York. A hearing to approve the Disclosure Statement has been set for October 29. The Court earlier approved the Stock Purchase Agreement with an investment group sponsored by Cerberus Capital Management L.P. and Oaktree Capital Management LLC in which the investment group committed to invest $175 million in cash in Formica and its subsidiaries.
Formica's Plan reflects agreement on the principal terms of a consensual reorganization among the company, its senior-secured lenders and the official committee of Formica's unsecured creditors.
"Now that we have filed our Plan of Reorganization, we are in the homestretch of a very challenging process," said Formica President and Chief Executive Officer Frank A. Riddick, III. "That we have gotten to this point in a manageable period of time is a tribute to the dedication and determination of our employees and the loyalty of our suppliers, customers and design communities. Throughout the process, Formica has continued to provide customers with an array of exciting new products. With a substantial new investment in the company, we will be able to demonstrate our industry leadership to an even higher degree."
Under the Plan of Reorganization, which is subject to creditor approval, confirmation by the Bankruptcy Court and certain other conditions, Formica will emerge with a significantly stronger balance sheet and less debt. The company believes that the process should conclude no later than the first quarter of 2004.
Subject to the terms of the Plan and certain other conditions, general unsecured creditors will receive a pro-rata share of $12.75 million in cash and $8.675 million in new subordinated secured notes. Some creditors who qualify as members of an Unsecured Convenience Class may choose to receive a cash payment of up to $10,000 as settlement for their claims, which are both subject to reduction by payment to an Unsecured Convenience Class of the lesser of 20% of general unsecured claims or $10,000. Senior secured lenders will receive $173 million in cash and will provide approximately $130 million in new financing to the company.
Formica will emerge from Chapter 11 with approximately $160 million of consolidated debt compared to more than $540 million in debt at the time of its Chapter 11 filing.
Upon approval of the Disclosure Statement, Formica will commence solicitation of votes for approval of the Plan from those of its pre-petition creditors who are entitled to vote on the Plan.
