Wellman exits bankruptcy as private company

By Caroline Salls

Pittsburgh, Feb. 2 - Wellman, Inc. emerged from Chapter 11 bankruptcy when its plan of reorganization took effect on Jan. 30 as a private company controlled by plan investors Sola, Ltd. and BlackRock Financial Management, Inc. and the company's old first-lien and second-lien debtholders.

According to a company news release, Sola and BlackRock invested $35 million in exchange for 50% of the voting power of reorganized Wellman, and the remaining 50% voting power went to the old first- and second-lien debtholders in consideration for extinguishing their pre-bankruptcy debt.

In addition, reorganized Wellman has entered into a $35 million revolving credit facility with CIT.

Proceeds from the plan sponsors and exit facility will be used to repay the company's debtor-in-possession credit agreement and to pay deferred financing fees, administrative expenses, priority claims, cure payments and professional fees.

"We are emerging with a strong financial foundation and sufficient liquidity to meet our customers' needs," Wellman chief financial officer Keith R. Phillips said in the release.

According to the release, the reorganized company has a new seven-member board of directors that includes president and chief executive officer Mark Ruday.

"This has been a long and difficult process," Ruday said in the release.

"With our sole focus on the PET Resins industry and strong capital structure, we look forward to continuing to have mutually beneficial relationships with all of our constituencies."

As previously reported, Wellman's plan of reorganization was approved Jan. 12.

According to an 8-K filed with the Securities and Exchange Commission, the exit financing will be provided by CIT Group/Business Credit, Inc., CIT Bank and CIT Capital Securities LLC. CIT Group is acting as the administrative agent, and CIT Capital Securities is the sole arranger and sole bookrunner.

The exit revolver will mature three years from the plan effective date.

Interest will be either Prime rate plus 700 basis points or Libor plus 800 bps, subject to a 200 bps Libor floor.

Plan sponsors Sola, Ltd. and BlackRock Financial Management, Inc. will invest $35 million in reorganized Wellman in exchange for common stock and $40 million of second-lien notes, which they will have the right to convert into 50% of the total outstanding common stock of the reorganized company.

The existing first-lien debtholders will convert their pre-bankruptcy debt into common stock and $36 million of third-lien notes, which can be converted into 30% of the total outstanding common stock of reorganized Wellman.

Existing second-lien debtholders will convert their debt into common stock and $24 million of third-lien notes, which can be converted into 20% of the total outstanding common stock of the reorganized company.

The holders of the company's first-lien debt will also receive the net proceeds from the sale of the company's facility in Darlington, S.C., and the second-lien debtholders will also receive 80% of the net proceeds of some of Wellman's legal claims that existed at the confirmation date, which will be deposited into a litigation trust.

Wellman's unsecured creditors will receive the remaining 20% of the litigation trust proceeds.

The company's preferred and common stockholders will not receive any distributions under the plan.

Wellman, a polyester products manufacturer based in Fort Mill, S.C., filed for bankruptcy on Feb. 22, 2008. Its Chapter 11 case number is 08-10595.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.