Starke also calculates that the recovery on WaMu’s $7.5 billion in preferred equities will see no distribution in the worst case, and up to a 10 percent recovery in the best case.
WaMu’s plan, designed to distribute at least $7 billion, carries out a settlement announced on March 12 to end disputes with JPMorgan Chase & Co. over who is entitled to $4 billion of WaMu’s money on deposit at WaMu’s bank subsidiary when the bank was taken over by regulators and sold to JPMorgan.
Senior bondholders at the WaMu bank said yesterday that they side with the FDIC and oppose aspects of the settlement where WaMu and the JPMorgan split up $5.4 billion to $5.8 billion in income tax refunds. While WaMu is to receive between $1.8 billion and $2 billion, the bank’s bondholders contend that JPMorgan isn’t entitled to $1.4 billion of the refunds. They believe the refunds should go to the bank’s receiver instead.
For details on the plan, click here to see the March 29 Bloomberg bankruptcy report. The plan includes a backstopped $50 million equity rights offering where holders of the PIERS preferred securities can buy stock in the ongoing WaMu business. The WaMu businesses to continue are WMI Investment Corp. and WM Mortgage Reinsurance Co. Evidently to utilize a tax-loss carryforward, the business is continuing rather than being liquidated entirely.
The rights offering is being backstopped by affiliates of Appaloosa Management LP, Centerbridge Partners LP, Owl Creek Asset Management LP and Aurelius Capital Management LP.
The WaMu holding company filed under Chapter 11 in September 2008, one day after the bank subsidiary was taken over. The bank was the sixth-largest depository and credit-card issuer in the U.S. and the largest bank failure in the country’s history. The holding company filed formal lists of assets and debt showing property with a total value of $4.485 billion against liabilities of $7.832 billion.
The holding company Chapter 11 case is Washington Mutual Inc., 08-12229, U.S. Bankruptcy Court, District of Delaware (Wilmington)
Xerium File Prepack, Shareholders Retain Some Stock
Xerium Technologies Inc., a manufacturer of consumable products for paper manufacturers, filed a prepackaged Chapter 11 reorganization this morning in Delaware that has what the company called “overwhelming support” from the secured lenders.
The plan is to convert $620 million of debt into 82.6 percent of the new stock, $10 million cash, and $410 million in new term loans to mature in 2015.
Existing shareholders can retain 17.4 percent of the stock while being given warrants for another 10 percent.
Xerium solicited votes on the plan prior to today’s filing in bankruptcy court.
The Raleigh, North Carolina-based company listed assets of $693.5 million against debt totaling $813.2 million.
For nine months ended Sept. 30, the net loss was $15.2 million on net sales of $368 million. For the three quarters, interest expense of $48.9 million exceeded $43 million of income from operations.
The case is In re Xerium Technologies Inc., 10-11031, U.S. Bankruptcy Court, District of Delaware (Wilmington)
Alabama’s Dunhill Petroleum Storage Files in Mobile
Dunhill Entities LP, the owner of two petroleum storage facilities in Alabama, filed a Chapter 11 petition on March 26 in Mobile, Alabama, along with affiliates.
One terminal, in Chickasaw, Alabama, has a capacity of 650,000 barrels. The second, in Mobile, has an 850,000-barrel capacity.
Dunhill has a contract to sell the assets for $40.5 million to Arc Terminals LP. All except $500,000 of the purchase price will be paid by exchange for secured debt.
Dunhill wants the bankruptcy judge to require other bids by May 10, followed by an auction on May 12.
A court filing blames bankruptcy on cost overruns and delays in a construction contract. A construction loan matured in late 2008.
The petition says assets are less than $50 million while debt exceeds $50 million.
The case is In re Dunhill Entities LP, 10-01342, U.S. Bankruptcy Court, Southern District Alabama (Mobile).
Pacific Ethanol Plan Gives Ownership to Lenders
Four ethanol plants owned by Pacific Ethanol Inc. filed a Chapter 11 plan and disclosure statement on March 26 converting $293.5 million of secured debt into the new stock and $115 million in new debt obligations.
Secured lenders owed $244.5 million under the pre- bankruptcy credit agreement are to receive 73 percent of the equity in a new company being created to own the plants. The pre-bankruptcy lenders will also receive a new $48.8 million term loan. The disclosure statement is scheduled for approval at an April 23 hearing.
As an inducement for lenders to provide a $15 million revolving credit and term loan to finance an exit from Chapter 11, the lenders will receive 27 percent ownership of the plants plus a new $18.2 million term loan.
Financing for the reorganization in the amount of $24 million will be repaid from proceeds of a new term loan. Pre- bankruptcy debt that was converted to a post-bankruptcy secured loan will be exchanged for a new term loan.
Unsecured creditors, owed $300,000, should be paid in full or almost so.
The ultimate owner of the plants, Pacific Ethanol, isn’t itself in Chapter 11 nor is the marketing affiliate Kinergy Marketing LLC. Pacific Ethanol won’t retain any of the equity in the plants under the plan.
Pacific Ethanol said in a statement yesterday that it will continue to operate the plants for the new owners under a management agreement. Pacific Ethanol also said it’s negotiating with the lenders about acquiring some of the new equity in the plants.
The Sacramento, California-based company wasn’t operating three plants when the reorganization began in May. One was returned to service. At full production, annual capacity would be more than 200 million gallons.
At the outset of Chapter 11, debt included $270 million owing to the secured creditors on a term loan, revolving credit, construction financing, and other liabilities.
The case is Pacific Ethanol Holding Co. LLC, 09-11713, U.S. Bankruptcy Court, District of Delaware (Wilmington)
Lehman Makes Preliminary Breakdown on Filed Claims
Lehman Brothers Holdings Inc. filed a preliminary report yesterday on the claims resolution process.
From 65,000 claims for approximately $820 billion, not including claims with amounts unspecified, Lehman said in yesterday’s regulatory filing that the total drops to $650 million by eliminating “clear errors, duplications and non controversial corrections.”
Lehman sees the major debts of the holding company as including $99 billion in noteholder claims and $2 billion in accounts payable.
Lehman affiliates will end up being owed almost $43 billion, according to the projection. The company sees claims on guarantees issued by Lehman as aggregating $115 billion.
Lehman filed a liquidating Chapter 11 plan this month and is scheduled to file a disclosure statement by April 14. To read about the plan, click here for the March 16 Bloomberg bankruptcy report.
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