Sun senior lenders to receive 90% of stock in reorganization plan

New York, Nov. 8 - Sun Healthcare Group, Inc. said it filed a plan of reorganization that will give its senior lenders 90% of the company's new common stock.

General unsecured creditors will receive 10% and holders of Sun's senior subordinated debt will receive warrants to buy 5% of the new common stock.

Holders of Sun's convertible subordinated debt, convertible trust preferreds and common stock will receive nothing under the plan.

According to the plan, the senior lenders have allowed claims of $843.3 million and the senior subordinated noteholders $431.8 million.

Bank of America is administrative agent for the senior lenders. The senior subordinated notes are in three series: its 9 3/8% senior subordinated notes due 2008, its 9½% senior subordinated notes due 2007 and its 11¾% senior subordinated notes due 2002. Sun had two series of convertibles, its 6% convertible subordinated debentures due 2004 and its 6½% convertible subordinated debentures due 2003.

Albuquerque, N.M.-based Sun said it filed the plan Thursday with the U.S. Bankruptcy Court for the District of Delaware. The company said it has the support of its "most significant creditor constituencies."

The reorganization plan is subject to approval by some classes of creditors and Sun said a disclosure statement will be mailed once the Bankruptcy Court approves the materials.

Sun, which provides long-term care, filed for Chapter 11 protection on Oct. 14, 1999 blaming drastic cuts in Medicare reimbursement and "continued underpayment by most state-funded Medicaid systems."

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