Viskase to restructure 10¼% notes, holders to receive new notes, preferred stock

New York, July 16 - Viskase Cos., Inc. said it executed a restructuring agreement with an ad hoc committee of holders of its 10¼% senior notes due Dec. 1, 2001.

Under the plan, the existing notes will be exchanged for new senior secured notes and shares of series A convertible preferred stock.

For each $1,000 principal amount of the existing notes, holders will receive $367.96271 of new notes and 126.82448 shares of preferred stock. In total the Willowbrook, Ill. food packaging company will issue $60 million of the new notes and 20.68 million shares of preferred stock.

The new notes will pay 8% interest a year, payable semi-annually except in annually in year four and quarterly in year five. For the first three years interest will be paid in kind. During the last two years interest will be paid to the extent of available cash flow and the remainder in kind. They will mature Dec. 1, 2008.

Security for the notes will be a first lien on Viskase's assets but they will be subordinated to a working capital credit facility of up to $25 million.

The preferred stock will pay a 6% cumulative dividend and will have a liquidation preference of $5 per share. It will be convertible at any time at 20 cents per share. On conversion the stock will represent about 97% of the common stock, Viskase said.

Dividends will be paid in cash to the extent the company is "legally, contractually and financially able to pay dividends."

A further 1.32 million shares of preferred stock - 6% of the total - will be reserved for company management with a vesting schedule.

The exchange offer is subject to acceptance by holders of 100% of the outstanding senior notes, unless waived by the company and approved by the ad hoc committee. The committee represents owners of 54% of the senior notes.

If less than 100% of notes are voted for the exchange but there is enough backing for a Chapter 11 procedure Viskase said it will carry out the exchange through a prepackaged Chapter 11 filing.

If Viskase makes a Chapter 11 filing the existing stock will be cancelled and noteholders will receive 94% of the new stock while management will receive 6%. Holders of the old common stock will receive warrants to purchase 2.7% of the company's common stock.

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