Telogy files amended plan of reorganization to amend distribution for pre-bankruptcy senior secured claims

By Caroline Salls

Pittsburgh, March 21 - Telogy, Inc. filed a third amended plan of reorganization Monday with the U.S. Bankruptcy Court for the Northern District of California that amends the distribution for holders of pre-bankruptcy senior secured claims.

A hearing on approval of the disclosure statement is scheduled for March 30.

Under the plan, holders of $170.4 million in pre-bankruptcy senior secured claims will recover 790,331 shares of series A new shares and $30 million in term loan notes.

Under the previous plan, these creditors were slated to receive their share of special trust account cash, their share of 793,083 new series A shares and cash for all fees and expenses for the company's reorganization.

The company will enter into a $30 million five-year term loan at Libor plus 500 basis points. The term loan notes can be put to reorganized Telogy at a price of 101% and are callable any time after the plan's effective date at 102% before the second anniversary of the effective date, at 101% between the second and third anniversary of the effective date and at par thereafter.

Reorganized Telogy will issue 899,559 new shares, including 796,120 series A new shares, 4,819 series B new shares, 49,408 series C new shares and 49,408 series D new shares.

The company will also issue warrants to holders of subordinated claims to purchase additional 88,398 series A shares if they vote to accept the plan.

Treatment of creditors will include:

• Holders of $170.4 million in pre-bankruptcy senior secured claims will receive their share of special trust account cash, their share of 793,083 new series A shares and cash for all fees and expenses for the company's reorganization;

• Holders of $3,000 in Charter One loan agreement secured claims will receive reinstatement of the legal, equitable and contractual right to their claims, for which they will be paid in full;

• Holders of $1.15 million in general unsecured claims will receive their share of $100,000;

• Holders of $38,000 in critical vendor claims, including Agilent, Tektronix and Rhode & Schwarz, will receive 100% of their claim;

• Holders of $61 million in subordinated claims will receive their share of 3,826 new series A shares and two series of subordinated claim warrants to acquire 88,398 series A shares if they vote to accept the plan.

If they vote to reject the plan, subordinated claimholders will be treated as general unsecured claimants;

• Holders of intercompany claims, junior subordinated claims and interest claims will receive no distribution;

• Holders of $59,000 in convenience claims of $5,000 or less, who elect to reduce their claim to $5,000 or less or whose claims are reduced to $5,000 or less will be paid in full in cash.

Telogy said it expects to obtain an up to $20 million five-year revolving exit facility.

Telogy, a Union City, Calif.-based electronics testing company, filed for bankruptcy on Nov. 29. Its Chapter 11 case number is 05-49371.

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