Magnetation launches noteholder solicitation for loan participation

By Caroline Salls

Pittsburgh, May 12 – Magnetation LLC launched the solicitations to eligible holders of its 11% senior secured notes due 2018 to purchase by assignment some loans and commitments outstanding under its debtor-in-possession credit agreement, according to a Tuesday news release.

As previously reported, the DIP credit agreement calls for an up to $135 million senior secured super-priority term loan facility, consisting of $3.8 million of loans rolled up from existing term loans held by the DIP lenders, $63.7 million of new term loans made by the lenders and up to $67.5 million of loans rolled up from eligible noteholders.

Magnetation said eligible holders of notes as of May 12 will have the opportunity to purchase by assignment and assume a total principal amount of DIP loans and commitments equal to the total principal amount of all DIP loans and commitments multiplied by a fraction the numerator of which is the total outstanding principal amount of notes owned by, and subscribed under by, the holder, and the denominator of which is the total outstanding principal amount of all notes held by the lenders plus the total outstanding principal amount of notes owned by eligible holders that subscribe under the solicitation.

The solicitation is scheduled to expire at 5 p.m. ET on May 27.

Davis Polk & Wardwell LLP is serving as legal adviser and Blackstone Advisory Partners LP is serving as financial adviser in connection with the reorganization.

Magnetation, a joint venture between Magnetation, Inc. and AK Steel Corp., recovers high-quality iron ore concentrate from previously abandoned iron ore waste stockpiles and tailings basins. It is based in Grand Rapids, Minn., and filed for bankruptcy on May 5 under the Chapter 11 case number is 15-50307.

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