Keystone Consolidated files reorganization plan; unsecured, DIP creditors to get 100% of stock

By Caroline Salls

Pittsburgh, May 27 - Keystone Consolidated Industries, Inc. filed a first amended disclosure statement and plan of reorganization Friday with the U.S. Bankruptcy Court for the Eastern District of Wisconsin, giving all of the reorganized company's stock to unsecured and debtor-in-possession creditors.

The reorganized company will issue 11 million shares of new common stock, of which 10 million will be issued under the plan of reorganization and 1 million will be held by the reorganized company for future issuance. The company will also issue new senior notes.

Sherman Wire Co. will be reorganized as a wholly owned Keystone subsidiary.

The plan also calls for liquidating the following pre-petition subsidiaries: Sherman Wire of Caldwell, Inc.; J.L. Prescott Co. and DeSoto Environmental Management Inc.

In March, Keystone Consolidated reached a lock-up agreement with creditors, unions and retirees under which they agreed to negotiate a plan of reorganization agreeable to all sides.

Under the agreement, Keystone said it will cooperate with any alternative plan of reorganization that meets certain standards.

Under the plan of reorganization:

*Holders of secured claims will be unimpaired and not entitled to vote; they will receive 100% recovery in cash;

*Holders of general unsecured claims will be impaired and entitled to vote; they will receive their share of the unsecured cash distribution in cash, the new secured note proceeds and 4.9 million shares or 49% of the new common stock of the reorganized company;

*Holders of Congress Financial Corp. debtor-in-possession claims will be unimpaired and not entitled to vote. They will get 100% recovery in cash.

*Holders of Engineered Wire Products Inc. Financial debtor-in-possession facility claims will be considered to have accepted the plan upon confirmation. They will receive 100% recovery in 5.1 million shares or 51% of new common stock of the reorganized company.

*Holders of old preferred stock, old common stock and other securities claims will get nothing.

A hearing on confirmation of the plan will be held June 24.

Keystone, a Dallas-based fencing and wiring company, filed for bankruptcy on Feb. 26, 2004. Its Chapter 11 case number is 04-22422.

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