Key3Media reaches agreement with unsecured creditors

New York, April 9 - Key3Media Group, Inc. said it reached agreement with the official committee of unsecured creditors on terms of its reorganization plan.

Under the deal, general unsecured creditors will receive $2.5 million in cash, 40% of the net proceeds of an insurance claim up to a maximum of $4 million, warrants to purchase up to 5% of the reorganized company's equity with a strike price at the reorganization value, and potential additional minor assets that remain subject to final negotiation.

Thomas Weisel Capital Partners has agreed to forego its pro rata share of the distribution to unsecured creditors to which it otherwise would be entitled because it holds $110 million face amount of the company's subordinated notes.

The Los Angeles information technology tradeshow and conference organizer said it now has support of substantially all its creditor groups.

"With the full support of our secured creditors and the official committee of unsecured creditors now in place, we have cleared the last major hurdle to a successful reorganization of the company and expect to receive court approval of our plan within 60 days," said Fredric D. Rosen, chairman and chief executive officer of Key3Media, in a news release.

On March 26, Key3Media announced that it and Thomas Weisel Capital Partners had reached agreement with holders of the company's bank debt on the reorganization. Following the reorganization, the banks will remain lenders to Key3Media under three-year secured notes.

On Feb. 3, it announced a reorganization plan backed by investment funds managed by Thomas Weisel Capital Partners, which own approximately 68% of Key3Media's bank debt and approximately 38% of its 11.25% senior subordinated notes due 2011. After reorganization, the Thomas Weisel funds will own the overwhelming majority of the company's equity.

Through the reorganization, Key3Media will reduce its total debt by 87% from approximately $372 million to $50 million and eliminate all its existing preferred stock and common equity. Annual interest expense will be cut to $3.4 million from $38 million.

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