K-V Pharmaceutical files second amended plan; statement hearing May 1

By Caroline Salls

Pittsburgh, April 22 - K-V Pharmaceutical Co. filed a second amended plan of reorganization and related disclosure statement Monday with the U.S. Bankruptcy Court for the Southern District of New York that revises the proposed treatment for holders of convertible subordinated notes claims and general unsecured claims and the terms of a proposed rights offering.

Under the first amended plan, holders of convertible subordinated notes claim were slated to receive a share of 3% of the new common stock in the reorganized company and the rights to purchase up to $20 million of new common stock.

Under the second amended plan, only convertible noteholders that are accredited investors and that vote in favor of the plan will be eligible to participate in the rights offering.

General unsecured creditors will receive a share of $1.7 million in cash under the second amended plan, capped at 9.05% of the claim amount. These creditors were slated to receive a share of cash equal to the lesser of $1.49 million and 9.05% of the claim amount under the first amended plan.

Creditor treatment

Under the proposed second 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. Those who are accredited investors and vote to accept the plan will be eligible to participate in a rights offering 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 $1.7 million in cash, capped at 9.05% of the claim amount;

• 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 May 1.

K-V Pharmaceutical, a St. Louis specialty pharmaceutical company, filed for bankruptcy on Aug. 4, 2012. Its Chapter 11 case number is 12-13346.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.