Le-Nature's emerges from Chapter 11 bankruptcy

By Caroline Salls

Pittsburgh, July 28 - Le-Nature's, Inc. emerged from Chapter 11 bankruptcy when its plan of liquidation took effect Friday, according to a Sunday filing with the U.S. Bankruptcy Court for the Western District of Pennsylvania.

The plan was confirmed on July 8.

As previously reported, the company filed the plan in conjunction with its official committee of unsecured creditors, ad hoc committee of secured lenders and ad hoc committee of senior subordinated noteholders.

Under the 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;

• 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, as well as 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.

As previously reported, the reorganized company's board will be comprised of four members selected by lenders, two by unsecured creditors and one by subordinated debtholders until all secured claims are paid, then the board will be made up of two members chosen by lenders, four by unsecured creditors and one by subordinated debtholders;

Exit financing

The company said in an April court document that it planned to have $25.96 million available on the plan effective date to cover $24.02 million in claims.

The available funding includes a $15 million five-year exit facility.

Interest will be Libor plus 300 basis points.

The lenders include Harbinger Capital Partners Master Fund I, Ltd., Aurelius Capital Partners, LP, Latigo Master Fund, Ltd., UBS Willow Fund, LLC, Bear, Stearns & Co., Inc., King Street Capital Management, LLC, Onex Credit Partners, LLC, Hamblin Watsa Investment Counsel, Ltd. and Scoggin World Wide Fund Ltd.

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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