Hilex Poly exits pre-packaged Chapter 11 bankruptcy

By Caroline Salls

Pittsburgh, July 9 - Hilex Poly Co. LLC emerged from its pre-packaged Chapter 11 restructuring Wednesday, according to a company news release.

The company's pre-packaged plan of reorganization, which took effect Wednesday, was confirmed on June 26 by the U.S. Bankruptcy Court for the District of Delaware.

Through the plan, Hilex said it has reduced its overall debt and strengthened its balance sheet to better serve its customers.

In addition to a substantial reduction in outstanding debt, the company said the plan reduced annual interest expense and will significantly improve cash flow.

"The approved plan provides a solid foundation for the new Hilex," president and chief executive officer David Pastrich said in the release.

"The company now has a stronger balance sheet, which enables us to invest more capital back into the business, while we continue to maintain and strengthen our market leadership position in the plastic bag industry."

Under the pre-packaged plan of reorganization:

• All existing equity interests in Hilex will be canceled and 100% of the new membership interests will be issued to a newly formed holding company named HLX PLY Investors Corp.;

• 85% of the new common stock of the reorganized company will be distributed to the holders of second-lien claims in exchange for the cancellation of their pre-bankruptcy debt;

• 15% of the new common stock will be distributed to holders of first-lien term loan B claims in exchange for the cancellation of their term loans. The holders of the first-lien term B claims will also receive $115.1 million in new notes due 2013, which will accrue cash interest at a rate of 12¾%, or payment-in-kind interest at a rate of 13½%, at the company's option; and

• Holders of first-lien revolving loan claims will receive full payment in cash.

As previously reported, Hilex secured a commitment for $125 million in exit financing from GE Capital and Morgan Stanley.

Interest on the $75 million two-year exit revolving credit facility will be Libor plus 275 basis points, with a 290 bps floor. Interest on the $50 million two-year term loan will be Libor plus 800 bps, with a 400 bps Libor floor.

Hilex, a Hartsville, S.C., plastic bag company, filed for bankruptcy on May 6. Its Chapter 11 case number is 08-10890.

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