Muzak Holdings amends plan treatment for secured term loan claimants

By Caroline Salls

Pittsburgh, Oct. 5 - Muzak Holdings, LLC filed an amended plan of reorganization Friday with the U.S. Bankruptcy Court for the District of Delaware to change the proposed treatment for holders of secured term loan claims.

Under the amended plan, the secured term loan creditors will be paid in full in cash using proceeds from an exit facility.

These creditors were previously slated to either receive payment in full in cash with the proceeds of an exit facility or their share of a new term loan.

The new term loan has been eliminated from the plan.

Treatment of creditors will include:

• Holders of secured term loan claims will receive payment in full in cash from the proceeds of an exit facility;

• Holders of the $220 million 10% senior unsecured notes will receive $135 million in new senior unsecured notes with 8% cash and 7% PIK coupons, as well as $85 million of payment-in-kind preferred stock;

• Holders of the $115 million 9 7/8% senior subordinated unsecured notes will receive 100% of the new common stock of reorganized Muzak;

• Holders of the $24 million 13% senior discount unsecured notes will receive five-year warrants for 7.5% of the fully diluted new common stock at market value based on an enterprise value to be determined;

• Holders of general unsecured claims and priority claims will recover 100% in cash;

• Existing equity interests will be cancelled and holders will receive no distribution; and

• Intercompany interests will be retained.

The disclosure statement approval hearing is scheduled for Oct. 27.

Muzak, a Fort Mill, S.C.-based recorded music company, filed for bankruptcy on Feb. 10, 2009. Its Chapter 11 case number is 09-10422.

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