Specialty Products Holding plan of reorganization effective Dec. 23

By Caroline Salls

Pittsburgh, Dec. 23 – Specialty Products Holding Corp.’s Chapter 11 plan of reorganization took effect on Tuesday, according to a filing with the U.S. Bankruptcy Court for the District of Delaware.

The plan was confirmed on Dec. 10.

As previously reported, 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.

According to an 8-K filed by RPM, the asbestos trust will be funded by $450 million in cash, funded through RPM’s revolving line of credit with a group of banks, $102.5 million in cash, RPM stock or a combination of the two on or before the second anniversary of the effective date, $120 million in cash, RPM stock or a combination of the two on or before the third anniversary of the effective date and a final payment of $125 million in cash, RPM stock or a combination of the two on or before the fourth anniversary of the effective date.

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.

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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