The Stock Purchase Agreement calls for the investment group to invest $175 million. Of that amount, $173 million will be used to repay secured bank debt. This would leave Formica with approximately $160 million of senior secured debt remaining in the reorganized business in a transaction valued at $427 million. Formica had more than $540 million in debt at the time of its Chapter 11 filing. Additionally, the Court approved a 60-day extension for the company to exclusively file a Plan of Reorganization.
In addition, the Bankruptcy Court authorized Formica to proceed directly to filing a consensual Plan of Reorganization without a bidding process.
Formica also announced that it has reached a consensual settlement agreement with its Committee of Unsecured Creditors to support the Plan of Reorganization the company jointly developed with the investors. Under the settlement reached by the Unsecured Creditors Committee, the Steering Committee for the Prepetition Senior Secured Lenders, the company and the buyer, FC Acquisition Holding Corp., general unsecured creditors' claims shall be discharged by receiving a pro-rata share of up to $12.775 million in cash and up to $8.675 million in new subordinated secured notes. The cash and notes are subject to reduction for payment to the Unsecured Convenience Class of creditors, each member of which will receive the lesser of 20 percent of each allowed unsecured claim or $10,000. Under the Joint Plan of Reorganization, the investors will not participate in the recovery by unsecured creditors.
As previously disclosed, Formica has received the support of its secured lenders for the transaction and the Plan of Reorganization. Implementation of the Plan is conditioned on confirmation by the Bankruptcy Court.
"Today's actions are indeed welcome news and significant milestones in our reorganization," said Formica President and CEO Frank A. Riddick III. "These developments should accelerate the timetable for the company's emergence from Chapter 11 because all of the relevant constituencies have agreed to support the company's prompt emergence.