School Specialty emerges from bankruptcy with $320 million in loans

By Caroline Salls

Pittsburgh, June 11 - School Specialty, Inc. has completed its financial restructuring and emerged from Chapter 11 bankruptcy, according to a company news release.

"We have successfully completed a major step in our corporate transformation by emerging with a sound capital structuring, significantly less debt and the financial flexibility to continue building our business to deliver better value for our customers," president and chief executive officer Michael P. Lavelle said in the release.

In conjunction with its emergence, School Specialty said it has a new, fully committed five-year $175 million asset-based revolving credit facility led by Bank of America, NA and SunTrust Bank and a six-year $145 million term loan facility led by Credit Suisse Securities (USA) LLC.

Interest on the revolver will be either Base rate plus 125 basis points or Libor plus 225 bps.

Pricing on the term loan, which had been upsized from $125 million during the syndication process, is Libor plus 850 bps with a 1% Libor floor, and it was sold at an original issue discount of 98.

As previously reported, the company's plan of reorganization was confirmed on May 23 by the U.S. Bankruptcy Court for the District of Delaware. The plan effective date is June 11.

Plan terms

Under the plan,

• All asset-based debtor-in-possession financing claims, Bayside Capital, Inc. DIP financing claims, administrative claims, priority tax claims, other priority claims, pre-bankruptcy ABL facility claims, pre-bankruptcy term loan claims and other secured claims will be paid in full in cash;

• Holders of the noteholder DIP loan claims will receive $103 million in cash and 65% of the equity in the reorganized company;

• Holders of noteholder unsecured claims will receive a share of 35% of the equity in the reorganized company;

• General unsecured creditors who do not make a convenience election and holders of trade claims who do not make a trade claim election will receive a delayed cash payment equal to 20% of their claim with 5% interest. The payments will be made 6.5 years after the plan effective date;

• Holders of trade claims who make a trade claim election and agree to do business with the reorganized debtor on 2012 terms will receive a 45% recovery with 10% interest, payable 6.5 years after the plan effective date;

• Holders of convenience claims of $3,000 or less will recover 20% in cash; and

• No distribution will be made on account of equity interests.

School Specialty, a Greenville, Wis.-based education company, filed for bankruptcy on Jan. 28. The Chapter 11 case number is 13-10125.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.