Owens Corning's bank debt slipped into the 60-62 range from the 65 level after the company filed its third amended joint plan of reorganization. The new plan does not provide a proposed settlement value to bank debt lenders for their claims to certain subsidiary guarantees.
The basis of the Owens Corning plan calls for substantive consolidation. If the company succeeds in its consolidation efforts, all the assets of the company will be thrown into the same pot to be distributed among the creditors. Lenders' claims to the guarantees would have provided the group with a slightly higher recovery. An Owens Corning spokesman declined to comment on lenders' guarantees. "We are still hoping to reach a consensual plan that is in the best interest of our creditors," he said. Calls to counsel representing the lenders were not returned by press time.
Meanwhile, Leap Wireless International's vendor-financing paper has been stronger as the company winds up its bankruptcy proceedings. A $13-15 million piece of the loan was auctioned off last Friday in the 42-44 range, said traders. The seller was said to be one of the original holders of the paper. The vendor financing debt has been stronger over the last month because the company should soon emerge from bankruptcy, financial results have been improving and Leap is closing under-performing markets, which frees up spectrum that can be sold, noted one investor.
Vendor debt claim holders are slated to receive 96.5% of the new common stock in the reorganized company as well as new senior notes totaling $350 million. Last week the company received approval from the bankruptcy court for its plan of reorganization. Leap now intends to begin soliciting votes from its creditors. The company said in a written statement that it expects the plan to be approved at the confirmation hearing, which is scheduled to begin the week of Sept. 29. Doug Hutcheson, Leap's senior v.p. and cfo, could not be reached by press time.