Keystone Consolidated plan of reorganization confirmed

By Caroline Salls

Pittsburgh, Aug. 11 - Keystone Consolidated Industries, Inc.'s plan of reorganization was confirmed, according to a Wednesday filing with the U.S. Bankruptcy Court for the Eastern District of Wisconsin.

The proposed plan of reorganization gives all of the reorganized company's stock to unsecured and debtor-in-possession creditors.

Sherman Wire Co.'s assets and operations will be sold to Keystone and it will operate as a wholly owned Keystone subsidiary.

The plan also calls for the liquidation of its pre-bankruptcy subsidiaries Sherman Wire of Caldwell, Inc.; J.L. Prescott Co. and DeSoto Environmental Management Inc. and the distribution of proceeds to their unsecured creditors.

Under the plan of reorganization:

*Holders of secured claims will be unimpaired and not entitled to vote; their claims will be reinstated, giving them 100% recovery;

*Holders of general unsecured claims will be impaired and entitled to vote; they will receive $5.2 million in cash, a $4.8 million secured note and or 49% of the common stock of the reorganized company;

*Unsecured creditors of FV Steel & Wire Co. will be paid in full in cash;

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

*EWP Financial, LLC, an affiliate of Contran Corp., Keystone's pre-petition majority shareholder, will, in its role as one of Keystone's DIP lenders, convert $5 million of its credit facility, certain pre-petition unsecured claims and certain administrative claims into 51% of the common stock of reorganized Keystone;

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

Exit facility terms

The company has a commitment for an $80 million exit credit facility.

Wachovia Capital Finance Corp. will be the administrative agent for the facility, and Wachovia Capital Markets Inc. will be lead arranger and bookrunner.

The financing will be used to fund Keystone's plan of reorganization and to provide working capital for its business needs.

Included in the $80 million facility will be a term loan of up to $25 million and a revolving credit facility, with availability on the revolver set by a borrowing base. There will be a letter-of-credit facility of up to $6 million.

The interest rate will be set by a grid based on excess availability.

For availability of more than $25 million, the revolver will be at Libor plus 200 basis points and the term loan at Libor plus 225 bps; for availability of $15 million to $24.9 million, the revolver will be at Libor plus 225 bps and the term loan at Libor plus 250 bps; and for availability of $14.9 million or less, the revolver will be at Libor plus 250 bps and the term loan at Libor plus 275 bps.

The loan has a 25 bp unused fee.

Call protection is 101 in the first year, 100.5 in the second year and 100.25 after that.

The facility matures after five years.

Keystone will be required to use excess cash flow to pay down the term loan by up to $2 million a year and $5 million in total.

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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