Key Plastics exits pre-packaged bankruptcy case

By Caroline Salls

Pittsburgh, Feb. 13 - Key Plastics LLC emerged from Chapter 11 bankruptcy when its pre-packaged plan of reorganization took effect Friday, according to a filing with the U.S. Bankruptcy Court for the District of Delaware.

The plan was confirmed on Jan. 29.

As previously reported, holders of the company's $115 million of 11¾% senior notes due 2013 had three treatment options under the company's pre-packaged plan of reorganization.

Under the first option, noteholders will receive new Key Plastics equity but not participate in the company's rights offering; under the second option, noteholders will receive new equity and subscribe for additional equity by participating in the rights offering; and under the third option, noteholders will receive cash equal to 16% of the face value of the notes.

Holders of $9 million of the notes elected to receive just new equity, holders of $59.87 million elected to receive new equity and participate in the rights offering, and holders of $46.13 million of the notes elected to receive cash.

Noteholders who choose the second option will be entitled to subscribe for an additional 35% of new Key Plastics equity at a price of $57.15 per share under the $20 million rights offering.

Wayzata Investment Partners LLC has agreed to backstop the rights offering in exchange for a fee of 2% of the backstop commitment.

Treatment of creditors under the pre-packaged plan will include:

• Holders of $5 million in administrative expense claims, $535,000 in priority tax claims, $623,243 in lease rejection claims and $625,000 in other priority claims will recover 100% in cash;

• Holders of $121.76 million in senior note claims will receive either 65% of new stock, plus the option to subscribe for an additional 35% of new stock, for a 31% recovery, or cash equal to 16% of the face value of the claims, depending on which option they chose;

• Holders of $4 million in other secured claims will recover 100% either in cash or through the return of the collateral securing the claim;

• Holders of $8.65 million in general unsecured claims will recover 100% in cash or their claims will remain unaltered;

• Holders of $3.8 million in series A unit claims will recover 26% through payment of $474 in cash per unit held; and

• Holders of existing Key Plastics units and existing Key Plastics Finance stock will receive no distribution under the plan.

Key Plastics, a Northville, Mich., supplier of highly engineered and value-added plastic components and functional assemblies to original equipment manufacturers of light vehicles, filed for bankruptcy on Dec. 15. Its Chapter 11 case number is 08-13324.

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