Le-Nature's files amended liquidation plan, obtains commitment for $15 million exit facility

By Caroline Salls

Pittsburgh, June 19 - Le-Nature's, Inc.'s official committee of unsecured creditors, ad hoc committee of secured lenders and ad hoc committee of senior subordinated noteholders filed an amended plan of liquidation and accompanying disclosure statement Tuesday with the U.S. Bankruptcy Court for the Western District of Pennsylvania.

The original plan filed in March was classified as a plan of reorganization, and the amended plan was filed as a plan of liquidation.

Under the proposed plan, a liquidation trust will be established with a five-year term and given responsibility for taking legal action on behalf of the bankruptcy estate and making distributions to creditors. It will be overseen by a board selected by the official committee of unsecured creditors, ad hoc committee of secured lenders and ad hoc committee of senior subordinated noteholders.

Under the plan:

• Holders of bank lenders' secured claims will receive tier one beneficial interests in the liquidation trust and additional interests based on disallowance of any disputed claim in this class.

Under the original plan, these creditors were also slated to receive the cash making up collateral for their claims;

• Holders of bank lenders' unsecured claims, general unsecured claims and unsecured senior subordinated notes claims will receive tier two beneficial interests in the liquidation trust. Under the amended plan, these creditors will also receive additional tier two interests based on disallowance of any claims in this class and a percentage of proceeds from the sale of TSI/Holdings property.

However, any distributions due to senior subordinated noteholders will be redirected to the bank lenders until the lenders receive $110 million as a settlement payment.

The next $15 million will go to noteholders.

After that, up to $175 million, the distribution will be split equally between lenders and noteholders, then 45% to lenders and 55% to noteholders up to $200 million, 40% to lenders and 60% to noteholders up to $225 million, 35% to lenders and 65% to noteholders up to $250 million, 30% to lenders and 70% to noteholders up to $280 million and then 25% to lenders and 75% to noteholders;

• Holders of subordinated litigation claims will receive tier three trust interests; and

• Holders of interests in Le-Nature's will receive tier four trust interests;

The plan proposes to pay tier one first, then tier two and then tier three. Tier four will receive whatever is left.

Under the plan, Le-Nature's will be substantively consolidated.

Exit facility terms

Since it will not have enough available cash to fund plan distributions, Le-Nature's said it will enter into a five-year $15 million exit term loan facility, with $12 million to be provided by holders of lenders unsecured claims and $3 million by holders of unsecured senior subordinated notes claims.

Interest will be Libor plus 300 basis points, and Le-Nature's will pay a $200,000 commitment fee.

The company said the exit facility will be repaid from liquidation trust cash.

Le-Nature's, a Latrobe, Pa., manufacturer of flavored bottled water and other beverages, had an involuntary Chapter 7 bankruptcy case filed against it on Nov. 1, 2006. The case was converted to Chapter 11 on Nov. 3, 2006. The case number is 06-25454.

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