GenTek's bank debt got a boost after the company filed its plan of reorganization and disclosure statement with the bankruptcy court last Monday. Traders quoted the "C" piece at 611/2 64 and the pro rata, which includes the "B" piece, was quoted in the 641/2 66 range. Across the board, the bank debt is about two points higher. One buysider suggested that the name was ticking up as the company gets closer to emergence and the market perceives a resolution to a few hang-ups in the case.
The market for the "B" loan is higher than the "C" piece because those holding onto the "B" loan have secured claims against GenTek subsidiary, Noma Company. Richard NeJame, a director at Lazard, explained that within the bank facility there are two different collateral packages. The secured lenders to the "B" tranche will receive a slightly higher recovery in recognition of their additional collateral in GenTek's Canadian assets, particularly those of Noma, he added.
According to the reorganization plan, those holding onto the "B" will receive $33.3 million in new senior notes, $13.3 million in new senior subordinated notes and approximately 1.23 million shares of common stock. The package has a value equal to the enterprise value of Noma, minus a secured claim against the subsidiary, or approximately $69 million. According to the disclosure statement, $75.8 million of the $150 million amount of "B" claims will be treated as deficient. The deficiency in the "B" claim, after applying the value of Noma, will share equally with other secured lenders in the recovery from the U.S. assets, NeJame explained.
The plan of reorganization states that the other secured lenders, including the "B" loan deficiency claims, will receive $60 million in cash, $216.7 million of new senior notes, $86.7 million in new senior subordinated notes, and roughly eight million of new GenTek common stock. The secured lenders will also receive the new GenTek stock and warrants of any dissenting bondholder.
Lenders will also receive extra equity if general unsecured claims and trade vendors exercise their cash option and 60% of the proceeds from a litigation trust. The reorganization plan estimates that $686 million in claims will fall under the general senior lender category. J.P. Morgan is the agent bank on the GenTek loan that was put in place in 1999. Matthew Friel, v.p. and cfo, did not return calls.