Pacific Aerospace amends lock up; noteholders to receive more stock, fewer notes

New York, Oct. 23 - Pacific Aerospace & Electronics, Inc. said it amended the lock-up agreement with holders of its senior subordinated notes to reflect the company's decision not to sell its U.K. unit Aeromet International plc. Under the new agreement, noteholders will receive more equity and fewer notes when the company restructures.

The Wenatchee, Wash. specialist engineering company said the new lock-up agreement is an amendment to an earlier deal with holders of 98% of its 11¼% senior subordinated notes for a plan to restructure the company's debt and equity outside bankruptcy.

The noteholders have agreed to waive Pacific Aerospace's existing and future defaults on its notes. The 11¼% notes, including accrued interest, will be exchanged for a combination of common stock, convertible preferred stock, and new notes.

On completion of the restructuring, noteholders will own 97.5% of the company's stock and will receive $15 million of 10% pay-in-kind notes.

Previously the noteholders would have received $30 million of the new notes and 95% of the equity.

Like the original agreement, the amended lock-up expires on Dec. 31, 2001 or on completion of the restructuring, if earlier.

As part of the amended lock-up, Pacific Aerospace said it is seeking asset-based financing from commercial lenders in the U.S. and the U.K. to repay the senior debt and to provide additional working capital. The noteholders will be able to terminate the lock-up if a commitment for this financing is not obtained by Nov. 30, 2001.

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