MACH Gen files pre-packaged bankruptcy; second-lien lenders, shareholders to get equity

By Caroline Salls

Pittsburgh, March 4 - MACH Gen, LLC made a pre-packaged Chapter 11 bankruptcy filing on Monday in the U.S. Bankruptcy Court for the District of Delaware.

The company said it entered into a restructuring support agreement Jan. 15 with all of its first-lien lenders, more than 75% of its second-lien lenders and more than 85% of the holders of its equity interests.

MACH Gen said the pre-packaged plan will significantly reduce its long-term debt by about $1 billion, improve its overall financial condition and creditworthiness and ensure its continued operations as a going concern.

Plan terms

Under the plan:

• All of the second-lien lenders' claims will be exchanged for 93.5% of the equity interests in reorganized MACH Gen;

• First-lien revolver claims out of a total loan commitment of $200 million will be exchanged for obligations under, or paid with the proceeds of, a new first-lien revolver;

• First-lien term loan claims will be exchanged for obligations under, or paid with the proceeds of, a new first-lien term loan;

• Existing MACH Gen interests will be exchanged for 6.5% of the new common units; and

• All other claims, including all general unsecured claims, will be paid in full or otherwise rendered unimpaired.

In order to fund the distributions, the company said reorganized MACH Gen will enter into new first-lien facilities with Beal Bank USA, including a $483 million term loan and a $200 million revolver.

In addition, MACH Gen or a newly formed holding company will issue 10 million common units representing 100% of the membership interests.

Under the company's proposed timeline, a combined plan confirmation and disclosure statement approval hearing would be held on April 10.

DIP financing

In conjunction with the bankruptcy filing, MACH Gen requested approval of a total of $200 million in DIP financing from Beal Bank.

Interest will be Eurodollar plus 475 basis points.

The facility will mature on the earliest of 30 days after entry of the interim order if the final order has not been entered, seven days after written notice of default, the outside date defined in the restructuring support agreement, subject to a 75-day extension, and the effective date of a plan of reorganization.

The company is seeking interim access to $55.7 million of the Beal Bank financing.

Debt details

According to court documents, MACH Gen had $750 million in assets and $1.6 billion in debt as of Dec. 31.

The company's largest unsecured creditor is second-lien collateral agent the Bank of New York Mellon of Irving, Texas, with a $1,030,749,624 bank loan claim. No other creditors were listed with claims of $1 million or more.

Merrill Lynch Genco II, LLC, SOLA Ltd., Strategic Value Global Opportunities Offshore Fund 1-A, LP and Strategic Value Master Fund, Ltd. were listed as director owners of at least 10% of the company's equity securities, and Varde Partners, LP, Solus Alternative Asset Management LP and Strategic Value Partners, LLC were listed as indirect owners.

The company is represented by Richards, Layton & Finger, PA.

MACH Gen is a Silver Spring, Md.-based portfolio of power-generation assets. The Chapter 11 case number is 14-10461.

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