Meridian granted court approval for plan of reorganization; expects to exit bankruptcy in late December

By Jennifer Lanning Drey

Portland, Ore., Dec. 6 - Meridian Automotive Systems, Inc. obtained court approval for its plan of reorganization on Wednesday from the U.S. Bankruptcy Court for the District of Delaware, according to a company news release.

The company said it expects to emerge from bankruptcy by the end of December.

The confirmed plan will become effective after Meridian satisfies certain conditions including the closing and funding of a proposed $175 million exit financing facility. Meridian has a fully underwritten commitment letter from Deutsche Bank, which is currently finalizing the syndication of the exit financing facility.

"We are pleased to have court approval of a plan that deals fairly and equitably with all of our creditors," Richard E. Newsted, Meridian's president and chief executive officer, said in the release.

"We will emerge as a stronger company with significantly less debt and increased liquidity, two very positive factors which will contribute to our long-term success in the automotive industry."

As previously reported, under the plan, pre-bankruptcy first-lien claimants will receive their share of $18 million in cash and about $80 million in new notes through a term loan if the company's Fowlerville, Mich., facility sale/leaseback transaction closes before the plan effective date, or, if the Fowlerville transaction closes after the plan effective date, a share of $98 million in new term loan notes, as well as 95.5% of the total shares of new common stock in the reorganized company.

The $98 million term loan will have a six-year term and will have a junior-priority lien on substantially all of the assets of the reorganized company securing the proposed exit facility.

Interest on the term loan will be Libor plus 800 basis points.

Creditor treatment

Treatment of creditors under the plan will include:

• Holders of other secured claims will receive reinstatement of their claim or the collateral securing the claim;

• Holders of pre-bankruptcy first-lien claims will receive either a share of $18 million in cash and $80 million in new notes, as well as 95.5% of the new common stock if the Fowlerville transaction closes before the plan effective date, or a share of new notes from a $98 million term loan and 95.5% of the total shares of new common stock in the reorganized company if the transaction closes after the plan effective date.

Each pre-bankruptcy letter of credit will also be returned to the issuer undrawn and canceled;

• Holders of pre-bankruptcy second-lien secured claims will receive their share of 4.5% of the new common stock in the reorganized company, their share of new warrants and their share of the pre-bankruptcy second-lien claim trust interests, which will entitle holders to a share of the net litigation trust recoveries;

• Holders of general unsecured claims will receive their share of the general unsecured claims trust interests, which will entitle the holder to a share of the net litigation trust recoveries;

• Holders of pre-bankruptcy subordinated claims, as well as pre-bankruptcy Meridian interests and intercompany claims, will receive no distribution.

Meridian, a Dearborn, Mich., supplier of lighting, exterior composites, console modules, instrument panels and other interior systems to automobile and truck manufacturers, filed for bankruptcy on April 26, 2005. Its Chapter 11 case number is 05-11168.

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