General Media creditors get a choice of reorganization plans

By Jeff Pines

Washington, March 11 - General Media, Inc.'s creditors will have a choice of reorganization plans to choose from, said PET Capital Partners LLC, which holds 89% of the company's senior notes.

The alternative plan was filed with the U.S. Bankruptcy Court for the Southern District of New York on March 11, PET Capital said in a news release. PET Capital is affiliated with Marc Bell Capital Partners LLC.

Under the terms of the plan, all creditors would be repaid in full. Holders of the senior notes would get 100% of the equity of the reorganized company and $30 million in 13% seven-year term notes. Interest would be paid in kind for the first three years. The notes would be secured by a first priority lien on the reorganized company's assets.

Preferred shareholders would exchange their stock for $13.5 million of 15% eight-year secured subordinated notes. Interest would be payable in kind for the first three years. These notes would be secured by a lien that would be subordinated to the term notes and the company's exit financing.

Robert Guccione, the company's founder, would not have a role in the reorganized company.

The company is proposing its own plan, which does have a role for Guccione and also reimburses in full the holders of General Media's 15% senior notes and general unsecured claims. It would also reinstate the preferred stock, but control of the company would go to its parent Penthouse International.

"We believe that our plan is substantially superior to the plan proposed by the company in that it offers a guaranteed payment to the preferred stockholders as well as payment in full to the company's other secured and unsecured creditors," said Marc Bell, managing partner of Marc Bell Capital Partners LLC, in a news release. "In our view, the company's directors have a fiduciary duty to support our plan which is in the best interest of all the company's constituents."

General Media filed for Chapter 11 on Aug. 12, 2003.

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