Motor Coach granted court OK for plan of reorganization funded by $160 million rights offering

By Jennifer Lanning Drey

Portland, Ore., Jan. 28 - Motor Coach Industries International Inc. was granted court approval for its plan of reorganization Wednesday from the U.S. Bankruptcy Court for the District of Delaware, according to a source familiar with the case.

As previously reported, 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.

Creditor treatment

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.

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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