Buffets gets court OK for plan of reorganization, secures $117.5 million of exit financing

By Jennifer Lanning Drey

Portland, Ore., April 17 - Buffets Holdings, Inc. obtained court approval for its plan of reorganization Friday from the U.S. Bankruptcy Court for the District of Delaware, according to a company news release.

The company will emerge from bankruptcy as soon as all closing conditions to the plan and the exit financing have been met, which Buffets said should occur shortly.

Buffets also said it has received commitments for a total of $117.5 million in new first-lien exit financing from various lenders, which the company said will enable it to satisfy its Chapter 11 plan obligations and provide working capital for ongoing operations.

Additionally, $139.8 million in second-lien rollover financing will remain from the company's pre-bankruptcy lenders.

"We are very pleased to have passed this milestone of the Chapter 11 progress and that our emergence from bankruptcy protection is imminent," Mike Andrews, chief executive officer of Buffets, said in the release.

"We will emerge a stronger and more financially secured enterprise, and we look forward to building on the groundwork laid by our approved plan of reorganization by continuing to improve our operations and invest in our business."

Plan creditor treatment

Creditor treatment under the plan includes:

• Holders of administrative claims, priority tax claims and other priority claims will recover 100% in cash;

• Holders of other secured claims will recover 100% either through reinstatement of the claim, payment in cash or the return of the collateral securing the claim;

• Holders of the company's pre-bankruptcy senior secured loans will receive 93% of the newly issued common stock in the reorganized company and a share of any excess litigation trust proceeds;

• Holders of senior notes claims will receive 5.74% of the newly issued common stock, plus 81.93% of new warrants, 81.93% of the first $5 million of litigation trust proceeds and 81.93% of any excess litigation trust proceeds;

• Holders of general unsecured claims will receive 1.26% of the newly issued common stock, 18.07% of the new warrants, 18.07% of the first $5 million of litigation trust proceeds and 18.07% of any remaining litigation trust proceeds;

• Holders of general unsecured claims of $25,000 or less can participate in a convenience class in which they will receive cash equal to 8% of their allowed claims;

Holders of general unsecured claims of greater than $25,000 can elect to reduce their allowed claim to $25,000 so that they can participate in the convenience class; and

• The company's current common stock and warrants will be extinguished upon its emergence from bankruptcy, and holders will receive no distribution.

Buffets Holdings, a steak-buffet restaurant company based in Eagan, Minn., operates restaurants under the names Old Country Buffet, HomeTown Buffet, Ryan's and Fire Mountain. The company filed for bankruptcy on Jan. 22, 2008, and its Chapter 11 case number is 08-10141.

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