Education Holdings 1 disclosure statement approved, plan confirmed

By Jim Witters

Wilmington, Del., March 7 - Education Holdings 1, Inc. won approval of its disclosure statement and confirmation of its pre-packaged Chapter 11 plan during a March 7 hearing in the U.S. Bankruptcy Court for the District of Delaware.

The plan was fully consensual.

The plan of the reorganization, negotiated with senior secured lenders and pre-bankruptcy noteholders, is intended to allow the company to restructure and substantially deleverage its balance sheet, reduce cash interest expense to a level that is aligned with expected future cash flows and maintain additional flexibility to invest in growth initiatives to maximize enterprise value.

Debtors attorney Matthew M. Murphy said the plan should become effective before April 1.

A provision of the confirmation order allows all pre-effective-date matters to be concluded before the expiration of the automatic 14-day period between the confirmation ruling and the final order. The 14-day period allows time for appeals to be filed.

Plan terms

Under the confirmed Education Holdings' plan:

• General unsecured claims will be paid in full;

• The company's senior secured credit agreement will be amended and restated in its entirety by an exit facility agreement, and holders of senior secured claims will receive a share of the $36 million exit term loan, except for letter-of-credit claims, who will receive a share of a $7.5 million it exit revolving loans;

• Holders of second-lien credit facility claims will receive a share of $7 million in new second-lien notes;

• Holders of senior notes claims will receive a share of 100% of new senior subordinated notes, new preferred stock with a face value of $40 million and 30% of the total new common stock in the reorganized company;

• Holders of junior notes claims will receive a share of 70% of the new common stock; and

• Holders of 510(b) claims and old equity interests will receive no distribution.

Education Holdings 1, formerly the Princeton Review, Inc., is a Framingham, Mass.-based distance career school operator. Its Chapter 11 case number is 13-10101.

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