The amendments to the indenture would expressly permit Congoleum to issue a promissory note to the plan trust as part of the company's anticipated pre-packaged Chapter 11 plan of reorganization. The promissory note will be subordinated to the company's 8 5/8 percent senior notes and its revolving credit facility, Congoleum says.
The principal amount of the promissory note will initially be $2,738,234.75. The company expects that interest on outstanding principal of the plan note will accrue at a rate of 9 percent per annum. The company further expects that interest on the initial $2,738,234.75 will accrue and be payable quarterly and that interest on the additional principal amount will accrue quarterly.
Adoption of the proposed amendments to the indenture requires the consent of holders representing a majority of the aggregate principal amount of the outstanding notes as of the record date.
Roger S. Marcus, chairman of the board, commented "With our plan in what we hope is substantially final form, we can now seek final approval from our lenders and proceed with circulating our plan of reorganization to claimants for their approval, which we expect to begin shortly."