Accuride eyes OK of plan treatment deal with last-out loan holder

By Caroline Salls

Pittsburgh, Jan. 25 - Accuride Corp. is seeking court approval of a plan treatment dispute settlement with Sun Capital Securities Group, LLC affiliate Sun Accuride Debt Investments, LLC, according to a Friday filing with the U.S. Bankruptcy Court for the District of Delaware.

According to the motion, Sun Accuride became the holder of about $70 million of Accuride's pre-bankruptcy term loan debt under a February 2009 agreement.

Accuride said it was able to negotiate adjusted financial covenants with its credit agreement lenders as a result of Sun Accuride's willingness to subordinate its right to payment of its last-out loans to payment of other term loans.

In connection with the last-out loans, Accuride issued a warrant to Sun Accuride that was exercisable for up to 25% of Accuride's common stock. Sun Accuride exercised the warrant on Sept. 28, obtaining 24.5% of the company's common stock.

Also in connection with the last-out loans, Accuride said it has issued a new class of preferred stock to Sun Accuride, granting the holder the right to nominate five Sun Accuride directors and one independent director to Accuride's board.

Accuride said Sun Accuride has disputed the classification and treatment of its fees, expenses and interest under the company's proposed reorganization plan.

The company said it took the position that the Sun Accuride pre-bankruptcy last-out credit agreement claims are oversecured and therefore entitled to be paid in full in cash.

However, Accuride said it believes that Sun Accuride's credit agreement interest, fees and expenses can be satisfied through paid-in-kind advances, rather than paid in cash.

Under the settlement agreement, Accuride will pay Sun Accuride $70.07 million in cash on the plan effective date for the principal amount of the last-out term loan advances, as well as $1.5 million in cash for reimbursable out-of-pocket fees and expenses incurred under the credit agreement.

In addition, Sun Accuride will become a lender under Accuride's restructured credit facility agreement in an amount equal to the interest owed under the last-out loans.

In exchange, Sun Accuride has agreed to attempt to sell notes issued in connection with the last-out loans.

If any sale of the notes results in a purchase price of less than 98% of par, reorganized Accuride will pay the difference.

Accuride, an Evansville, Ind.-based manufacturer and supplier of commercial vehicle components, filed for bankruptcy on Oct. 8. Its Chapter 11 case number is 09-13449.

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