Automotores Gildemeister files Chapter 11 bankruptcy in New York

By Sarah Lizee

Olympia, Wash., April 13 – Automotores Gildemeister SpA made its Chapter 11 bankruptcy filing Monday in the U.S. Bankruptcy Court for the Southern District of New York.

As previously reported, the company announced on Saturday that it started solicitation of its pre-packaged Chapter 11 plan of reorganization, which involves the Chilean, Uruguayan and Brazilian operations and does not include the Peruvian or Costa Rican operations.

The company had entered into a restructuring support agreement with holders of a substantial majority of its secured notes to support the plan.

The company said the process will strengthen its balance sheet by reducing debt by over $200 million, allowing it to maintain its current leadership position in the market and continue operating in the normal course with its customers, creditors, associates, partners, brands and the financial sector.

Plan terms

According to the company’s disclosure statement filed Monday, on the plan effective date, the reorganized debtors will issue a senior tranche of secured notes, a junior tranche of secured notes and a subordinated tranche of unsecured notes. The new notes will be distributed to the holders of debtor-in-possession claims, 7½% notes due 2025 secured claims, and unsecured notes and related party claims.

On or prior to the plan effective date, a newly formed holding company structured as a sociedad por acciones under the laws of Chile will be formed. Chile HoldCo will hold all of the equity interests in reorganized Gildemeister from and after the plan effective date.

Chile Holdco will issue a single class of common equity interests with 100% economic and voting rights and having a paid in capital value of $44.3 million, and bonds in an aggregate principal amount of $132.8 million. The Chile Holdco securities will be distributed to USA Holdco, a newly formed holding company structured as a limited liability company under the laws of Delaware.

Due to its ownership of Chile Holdco, USA Holdco will indirectly hold 100% of the equity interests in the reorganized business.

USA Holdco will issue a single class of limited liability company units with 100% economic and voting rights to the holders of the 7½% notes due 2025 secured claims.

Each holder of an allowed DIP claim will have their DIP expenses paid in full in cash and, with respect to any remaining DIP claims, at the reorganized debtors’ option, the reorganized debtors will pay the DIP claims (i) dollar for dollar with new senior tranche secured notes, or (ii) full cash payment of the then unpaid balance of the DIP claims.

Each holder of an allowed administrative claim will receive payment in full in cash.

Each holder of an allowed priority tax claim and allowed other priority claim will receive treatment in a manner consistent with section 1129(a)(9) of the Bankruptcy Code.

Each holder of an allowed other secured claim will receive payment in full in cash, the collateral securing their claim or reinstatement of their claim.

Each holder of an allowed pre-petition bank financing claim will have their claim reinstated.

Each holder of allowed 7½% notes due 2025 secured claims will receive the following:

• If the holder is not a cash-out electing holder (i) $0.56046 in principal amount of new junior tranche secured notes for each $1.00 of allowed 7½% notes claims, (ii) $0.19789 in principal amount of new subordinated notes for each $1.00 of allowed 7½% notes claims, and (iii) its pro rata share of 100% of the USA Holdco LLC units; or

• If the holder has affirmatively made a plan election on its letter of transmittal to receive a cash-out distribution on its ballot, cash in an aggregate amount equal to 18.6833% of their 7½% notes claim and will be deemed to have waived any distribution under the plan under class 5 on account of its allowed 7½% notes unsecured deficiency claims.

Each holder of an allowed unsecured notes and related party claim will receive $0.20071 in principal amount of the new subordinated notes for each $1.00 of unsecured notes and related party claims.

Allowed general unsecured claims will be reinstated or paid in full in cash.

Intercompany claims will be reinstated or canceled with no distribution.

Holders of existing equity interests other than in Automotores Gildemeister SpA will have their interests reinstated or canceled with no distribution.

Each existing equity interest in Automotores Gildemeister SpA will be redeemed, canceled and released.

Debt details

In its petition, the company listed $500 million to $1 billion in both assets and liabilities.

Its largest unsecured creditors are Bank of New York Mellon, based in New York, with a $111.8 million deficiency claim, a $23.21 million 8¼% unsecured notes claim, a $9.86 million 7½% senior unsecured notes claim, and a $2.66 million 6¾% unsecured notes claim; Hyundai Corp., based in Seoul, South Korea, with a $2.51 million inventory financing claim; China National Heavy Duty Truck Corp., based in Shandong, China, with a $1.94 million inventory financing claim; Guillermo Reyes Rozas, based in Calama, Chile, with a $1.19 million contingent litigation claim; and Finance Department of Belo Horizonte, based in Belo Horizonte, Brazil, with a $1.04 million contingent litigation claim.

Automotores Gildemeister is a Santiago, Chile-based vehicle importer and distributor primarily in Chile and Peru. The Chapter 11 case number is 21-10685.

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