Centaur changes plan to address regulators' capital structure concerns

By Caroline Salls

Pittsburgh, Aug. 24 - Centaur, LLC requested court approval to make changes to its confirmed second modified fourth amended plan of reorganization, according to a Tuesday filing with the U.S. Bankruptcy Court for the District of Delaware.

As previously reported, Centaur's plan was confirmed on Feb. 18, 2011.

The company said one of the most significant conditions it must meet for the plan to take effect is obtaining regulatory approvals for the post-effective date capital structure of the reorganized debtors.

In the process of obtaining these approvals, Centaur said several agents of some of the regulatory bodies said existing management should have more significant participation in the post-emergence capital structure.

The agents also said they needed more assurance that existing management would continue to participate in the management of the reorganized company.

Under the proposed plan changes:

• An existing management co-investment amount will be increased to $4 million from $2 million and the post-effective date chief executive officer and chief operating officer will participate in the co-investment;

• The total face amount of new company PIK notes will be increased to $62 million from $60 million to partially address the dilution of the pre-bankruptcy first-lien claimholders' recovery resulting from the increase in the amount of the co-investment;

• The total face amount of stapled new company PIK notes will be increased to $51.67 million from $50 million to partially address the first-lien claimholders' dilution;

• Long-term employment agreement just cause termination definitions will be modified;

• A new operating company agreement and other plan documents will incorporate the terms of a management incentive plan;

• The amount of administrative fund cash to be transferred to a litigation trust by the company will be increased to $145,000 from $100,000. However, if the extra $45,000 is not used to pay the members of the litigation trust advisory board, it will be distributed to pre-bankruptcy first-lien claimholders as reimbursement for the use of cash collateral to fund the administrative fund; and

• Members of the litigation trust advisory board will each be paid $15,000 for their service.

A hearing is scheduled for Sept. 13.

Centaur, an Indiana-based gaming and horse-racing company, filed for bankruptcy on March 6, 2010. The Chapter 11 case number is 10-10799.

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