Electrical Components files bankruptcy under lender, shareholder deal

By Caroline Salls

Pittsburgh, April 1 - Electrical Components International, Inc. made a pre-packaged Chapter 11 bankruptcy filing on Tuesday in the U.S. Bankruptcy Court for the District of Delaware.

The company has entered into a plan support agreement with more than 66 2/3% of its first-lien and second-lien lenders and holders of more than 98% of the total outstanding shares of each class of holding company capital stock.

Under the plan, a group of investors have agreed to purchase 22.5 million shares of the reorganized company's equity at a price of $1 per share as well as between 10 million and 15 million shares of new common stock at a price of $1 per share for which first-lien lenders exercise a cash election.

In addition, some of the first-lien lenders have agreed to fund a $32.5 million tranche A term loan facility.

After plan distributions, the reorganized company will emerge from bankruptcy with up to $45 million in new cash from the equity investors and exit financing and will be poised for future growth and stability, according to a court filing.

Plan terms

The plan terms include:

• Holders of first-lien credit agreement claims will receive a share of 50 million new common shares unless they choose a cash election and $145 million in tranche B term loans. These creditors can choose to receive cash at a price of $1 per share, up to a maximum of $15 million.

Through the plan vote solicitation, the company said the first-lien lenders have elected to receive $10.36 million in cash, meaning they will receive 54.68% of new common stock. The equity investors will purchase the rest of the common shares;

• Holders of second-lien credit agreement claims will receive a share of $10 million in cash;

• Trade creditors and holders of general unsecured claims will be paid in full in cash;

• Holders of preferred equity interests will receive rights to share in the equity value of the reorganized company; and

• Holders of common equity interests will receive no distribution.

DIP financing

In conjunction with the filing, the company has received a commitment for $25 million in debtor-in-possession financing in the form of a delayed-draw term loan facility.

The company is seeking court approval of $17 million of the DIP financing.

UBS AG, Stamford Branch is the administrative agent.

The facility will mature on the earliest of six months from the bankruptcy filing date, the closing date of a sale of substantially all company assets, the effective date of a plan of reorganization and upon conversion or dismissal of the bankruptcy case.

Interest will be either Libor plus 650 basis points or Base rate plus 550 bps.

Debt details

According to court documents, Electrical Components had $363.65 million in assets and $435.7 million in debt at Jan. 31.

The company's largest unsecured creditors include:

• Tyco Electronics of Atlanta, with a $7.99 million trade debt claim;

• Vulkor Inc. of Warren Ohio, with a $5.23 million trade debt claim;

• Coleman Cable, Inc. of Atlanta, with a $4.05 million trade debt claim;

• Jabil Circuit (Guangzhou) Ltd. of China, with a $2.12 million trade debt claim;

• Molex Connector Corp. of Atlanta, with a $2 million trade debt claim; and

• Southwire OEM Division of Chicago, with a $1.98 million trade debt claim.

FP - ECI Holdings Co. of St. Louis owns 100% of Electrical Components International, and Francisco Partners, LP of San Francisco owns 98% of FP - ECI.

Electrical Components is a St. Louis-based manufacturer and marketer of wire harnesses and a provider of value-added assembly services. Its Chapter 11 case number is 10-11054.

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