Specialty Products Holding gets court confirmation on reorganization

By Kali Hays

New York, Dec. 10 – Specialty Products Holding Corp. obtained confirmation of its Chapter 11 plan of reorganization on Wednesday from the U.S. Bankruptcy Court for the District of Delaware, according to a news release.

As previously reported, a majority of the company’s voting creditors accepted the plan and the court approved the disclosure statement on Oct. 20.

The reorganization is based on a settlement agreement with parent company RPM International Inc., subsidiary Bondex International, Inc. and official representatives of current and future asbestos claimants resolving all present and future asbestos personal injury claims related to Bondex, Specialty Products and the other related entities.

Under the agreement, Specialty Products will create and fund a trust established under section 524(g) of the Bankruptcy Code for the benefit of current and future asbestos personal injury claimants.

On the effective date of the plan, the trust will be funded with $447.5 million in cash and one or more promissory notes, bearing no interest and maturing on or before the fourth anniversary of the effective date.

An additional $102.5 million in cash, common stock or a combination of the two will be contributed on or before the second anniversary of the plan effective date; an additional $120 million in cash, common stock or a combination of the two will be contributed on or before the third effective date anniversary; and a final payment of $125 million in cash, common stock or a combination of the two will be contributed on or before the fourth effective date anniversary.

In addition to Bondex and Specialty Partners, the settlement resolves all present and future asbestos personal injury claims related to RPM indirect subsidiaries Republic Powdered Metals, Inc. and NMBFil, Inc.

A total of $2.45 million of the trust funding is related to NMBFil asbestos personal injury claims, which are the subject of a separate settlement term sheet.

RPM chairman and chief executive officer Frank C. Sullivan said he is “pleased to bring finality to our legacy asbestos liability and welcome back to the PRM family an outstanding group of operating companies that are generating more than $400 million in sales on an annualized basis, along with strong operating income and cash flow,” according to the release.

Treatment of creditors under the plan will include the following:

• Priority claims and general unsecured claims will be paid in full in cash plus post-bankruptcy interest;

• Secured claims will either be paid in full in cash plus post-bankruptcy interest or be reinstated;

• Asbestos personal injury claims will be channeled to the asbestos trust;

• Intercompany claims will be reinstated; and

• Stock interests will be reinstated, and holders will retain their interests.

Specialty Products is a subsidiary of RPM International Inc., a Medina, Ohio-based producer of specialty chemicals. The subsidiary filed for bankruptcy on May 31, 2010 under Chapter 11 case number 10-11780.

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