Oneida’s bank debt has continued to climb from the 80s level, with the pro rata piece trading in the 91 1/2-92 1/2 range. A couple of investors believe the paper could even hit par as some of the bank debt is set to be equitized and the rest refinanced with new bank debt. Last week Oneida, which makes flatware and dinnerware, reached an agreement in principle with its lenders on a comprehensive restructuring plan and a new $30 million credit facility. The debt has moved up from the 82 level in the past month as the potential restructuring moved closer. The agreement also extends waivers on financial covenants and certain payments until August.
Agent bank J.P. Morgan and Banc of America Securities are said to have been reasonably active in trading recently. Officials at those banks did not return calls. The last amendment was signed by funds including Anchorage Capital, Quadrangle Group and SPS High Yield Loan Trading. Other original lenders such as J.P. Morgan, B of A, M&T Bank, Banca Nazionale Del Lavoro and Bank of Nova Scotia, signed the last amendment.
The agreement contemplates converting $30 million of principal bank debt into approximately 62% of Oneida’s common stock. The remaining indebtedness will then be restructured into a $125 million, three-year “A” loan and an $80 million, three-and-a-half year “B” loan. The restructuring is expected to be completed by mid-August. “The deal is a positive outlook,” said one distressed loan investor not active in the name. He added that the bank debt holders have a shot of making more than par recovery, as the bank debts converted to equity. This will lead to equity dilution, but will reduce debt, enabling the company to grow into its capital structure, he added. Greg Denny, cfo of Oneida, did not return calls.