Boomerang Tube files new Chapter 11 plan to address valuation ruling

By Caroline Salls

Pittsburgh, Dec. 21 – Boomerang Tube, LLC filed a new plan of reorganization and related disclosure statement Friday with the U.S. Bankruptcy Court for the District of Delaware.

The company said its previous plan was denied confirmation, because the court found that evidence demonstrated a range for the reorganized debtors value that would potentially allow holders of general unsecured creditors to share in that value. The original plan limited recoveries for general unsecured creditors to the proceeds of some unencumbered assets.

After the previous plan was denied, Boomerang said it held negotiations with its official committee of unsecured creditors, the term loan agent and some holders of the term loan facility on the terms of a revised plan that would account for the court’s valuation ruling.

Under the revised plan, holders of general unsecured claims will receive value on account of their claims in the form of a share of $2.25 million in cash.

As a result of the revised treatment, the committee agreed to support the plan and recommend that general unsecured creditors vote in favor of it.

Boomerang said the plan retains many of the other benefits to the debtors and their estates that were in the previous plan, including reducing funded debt obligations by converting $214 million in outstanding principal of term loan facility obligations into 100% of new holding company common stock and $55 million of subordinated secured notes issued by the new operating company.

The plan will be financed with the proceeds of a committed exit term facility. The Boomerang debtors may also elect to enter into an exit ABL facility, which would be used to pay off the obligations under the debtor-in-possession ABL facility and provide additional working capital to the reorganized company.

Creditor treatment

Treatment of creditors under the new plan will include the following:

• Holders of DIP ABL facility claims will receive a share of interests in the exit ABL facility if the ABL exit lenders are the same as the ABL DIP lenders or cash sufficient to pay in full all accrued, and collateralize all contingent, obligations and other amounts owed in accordance with the terms of the DIP ABL facility;

• Holders of DIP term facility claims and ABL facility claims will be paid in full in cash;

• Holders of term loan facility claims will receive their share of 100% of the new holding company common stock, 100% of new subordinated notes and payment in full in cash of all outstanding professional fees and expenses of the term agent and lenders;

• Holders of Heat Treat Line claims will receive either a class five note or a class five 5 1111(b) election note. The reorganized company will also abandon the SBI Heat Treat Line collateral;

• Holders of general unsecured claims will receive a share of $2.25 million in cash;

• Intercompany claims and intercompany interests will be left unaltered, except for those canceled and discharged as mutually agreed by the holder and the company;

• All existing equity securities will be canceled, and holders will receive no distribution; and

Holders of administrative claims, allowed priority tax claims, allowed other secured claims and allowed other priority claims will have their claims reinstated or paid in full in cash.

Plan comparison

Treatment of creditors under the previous plan was scheduled to include the following:

• Holders of ABL facility claims and DIP ABL facility claims were to either receive a share of interests in an ABL exit facility if the ABL exit lenders were the same as the ABL DIP lenders, or be paid in full in cash;

• Holders of DIP term facility claims were to be paid in full in cash;

• Holders of term loan facility claims were to receive a share of 100% of common stock in a new holding company, 100% of the subordinated notes and payment in full in cash of outstanding professional fees and expenses;

• Holders of SBI secured claims were to receive a promissory note issued by a new operating company;

• Holders of general unsecured claims were to receive a share of general unsecured creditors trust proceeds;

• Intercompany claims and intercompany interests were to be left unaltered, except for those canceled as mutually agreed to by the holder and the company; and

• All existing equity securities issued by Boomerang were to be canceled with holders receiving no distribution.

Boomerang Tube is a St. Louis-based producer of oil country tubular goods and line pipe that filed for bankruptcy on June 9, 2015. The Chapter 11 case number is 15-11247.

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