Ormet funding agreement approved, to issue $30.9 million 11% term notes

New York, Oct. 1 - Ormet Corp. will issue $30.9 million of 11% term notes under its exit funding agreement, approved by the U.S. Bankruptcy Court for the Southern District of Ohio Friday.

MatlinPatterson Global Advisers LLC will buy the notes.

On Sept. 28 the company, the unsecured creditors' committee and MatlinPatterson said they were close to an agreement on terms of the funding but did not have a term sheet available.

MatlinPatterson holds more than $100 million of note claims, according Ormet's disclosure statement.

Under the funding agreement, Ormet will issue $30.9 million of the notes, equivalent to the $30 million outstanding on its debtor-in-possession facility plus a 3% commitment fee paid in kind. They will be exchanged for the DIP term loans on a dollar-for-dollar basis.

Interest will be at 11%, payable in cash except for the first 2½ years when Ormet will pay interest at 15% in stock if average availability on its working capital facility is less than $10 million or a default has occurred on the facility or would occur if interest was paid in cash.

The notes will have a four-year maturity and will be secured by a lien on the properties of the issue and guarantors on the same terms as the DIP facility.

As long as interest is not being paid in kind, the notes are callable at 107 in the first year, 104 in the second, 101 in the third and par after that.

Ormet, a Wheeling, W.Va.-based aluminum company, filed for bankruptcy on Jan. 30, 2004. Its Chapter 11 case number is 04-51255.

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