Motor Coach Industries files plan funded by $160 million rights offering

By Caroline Salls

Pittsburgh, Oct. 31 - Motor Coach Industries International, Inc. filed its plan of reorganization and related disclosure statement Thursday with the U.S. Bankruptcy Court for the District of Delaware.

Under the plan, holders of the company's third-lien credit agreement secured claims will receive 100% of the new common stock in the reorganized company and the right to purchase new preferred stock under a $160 million rights offering to be backstopped by investment entities affiliated with Franklin Mutual Advisers, LLC.

The backstop party will receive a fee of 5% of the face amount of new preferred stock to be issued under the rights offering.

If the company chooses to terminate the agreement, Motor Coach will pay the backstop entities a $12 million topping fee and a $500,000 expense reimbursement.

However, if an alternate proposal is chosen under which the buyer agrees to pay the principal and interest due on the third-lien credit agreement, the topping fee will be reduced to $2.5 million.

In addition to the rights offering, Motor Coach said it plans to obtain exit financing to repay its debtor-in-possession facility and to use for its post-reorganization operations.

Treatment of creditors will include:

• Holders of other priority claims and secured second-lien credit agreement claims will recover 100% in cash;

• Holders of other secured claims will either be paid in full in cash or receive the collateral securing the claim;

• Holders of secured third-lien credit agreement claims will receive 100% of the new common stock in the reorganized company that is not earmarked for distribution under a management equity plan, as well as the right to participate in a preferred stock rights offering;

• Holders of general unsecured claims and interests in holdings will receive no distribution under the plan; and

• Intercompany interests will be retained.

The disclosure statement approval hearing is scheduled for Dec. 17.

Motor Coach Industries, a Schaumburg, Ill.-based designer, manufacturer and marketer of inter-city coaches and related replacement parts for the North American market, filed for bankruptcy on Sept. 15. Its Chapter 11 case number is 08-12136.

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