K-V Pharmaceutical submits amended plan; statement hearing April 23

By Caroline Salls

Pittsburgh, March 19 - K-V Pharmaceutical Co. filed an amended plan of reorganization and related disclosure statement March 18 with the U.S. Bankruptcy Court for the Southern District of New York that revises the proposed treatment for holders of general unsecured claims.

Under the original plan, holders of general unsecured claims were slated to receive a share of $1 million in cash. Under the amended plan, the creditors will receive cash equal to the lesser of their share of $1.49 million and 9.05% of the amount of the claim.

The amended plan also eliminates the old subordinated claims class and adds an existing securities law claims class and an equitably subordinated claims class.

Creditor treatment

Under the proposed amended plan:

• Priority non-tax claims will be paid in full;

• Holders of other secured claims will either receive cash or another treatment that renders their claims unimpaired;

• Senior noteholders will receive a share of 82% of the common equity of the reorganized K-V Pharmaceutical, subject to dilution by new common stock issued in connection with a management incentive plan and rights offering, and a $50 million second-lien term loan facility;

• New first-lien lenders will receive 15% of the new common stock, subject to dilution by the management incentive plan and rights offering, and a new first-lien term loan commitment premium;

• Convertible noteholders will receive a share of 3% of the new common stock, subject to dilution, and the rights to purchase up to $20 million of new common stock at an exercise price intended to provide the senior noteholders with a recovery equal to par plus accrued interest on their senior secured notes;

• Holders of general unsecured claims will receive a share of cash equal to the lesser of $1.49 million and 9.05% of the claim amount;

• Intercompany interests will be preserved and the company's corporate structure will be maintained; and

• No distributions will be made on account of securities law claims, equitably subordinated claims or existing K-V interests.

The disclosure statement hearing is scheduled for April 23.

K-V Pharmaceutical, a St. Louis specialty pharmaceutical company, filed for bankruptcy on Aug. 4. Its Chapter 11 case number is 12-13346.

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