K-V Pharmaceutical convertible noteholder group supports investor plan

By Caroline Salls

Pittsburgh, June 6 - Several K-V Pharmaceutical Co. investors entered into a plan support agreement with an informal group of holders of the company's convertible subordinated notes, according to a letter to judge Allan L. Gropper filed Thursday with the U.S. Bankruptcy Court for the Southern District of New York.

The letter was sent to Gropper by Greywolf-related investor representative Michael J. Sage of Dechert LLP on behalf of all of the investors who are parties to the support agreement.

Under the support agreement, the noteholder group has agreed to support explicitly the investors' plan of reorganization, stock purchase and backstop agreement, debtor-in-possession financing agreement and exit term loan agreement.

As a result of the agreement, Sage said the investors' plan now has the support of holders of more than 91% in dollar amount of the K-V convertible notes.

In addition, Sage said the investors' plan is supported by K-V's board of directors and official committee of unsecured creditors and by all of the major constituencies in the company's bankruptcy case except convertible noteholder Silver Point.

Plan changes

According to the letter, the K-V debtors and the investors agreed to several plan changes since a May 31 hearing, including the following:

• The direct purchase shares portion of the investors' proposed rights offering was reduced to $37 million from $75 million;

• The rights offering shares portion was increased to $238 million from $200 million;

• The distribution for general unsecured creditors was increased to $10.25 million from $10 million;

• Minor adjustments have been made to milestones included in the investors' stock purchase agreement and DIP loan agreement; and

• One of the members of the informal noteholders' committee has become a party to the exit term loan.

According to Sage's letter, the investors include Capital Ventures International, Greywolf Capital Overseas Master Fund, Greywolf Capital Partners II LP, Greywolf Opportunities Fund LLC, Kingdon Associates, Kingdon Credit Master Fund LP, Kingdon Family Partnership, LP, M. Kingdon Offshore Master Fund LP and Deutsche Bank Securities Inc.

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

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