The bankruptcy court approved Hayes Lemmerz's amended disclosure statement despite the objections of lenders including General Electric Capital Corp., Foothill Capital Corp, Citadel Limited Partnership and Sankaty Advisors, as LMW went to press last week. Officials from GE Capital, Citadel, and Sankaty did not return calls seeking comment. Officials at Foothill could not be reached by press time. Levels for the bank debt remained unchanged in the 82 1/2 -83 1/2 range and Hayes' senior notes are quoted in the 59-61 context.
Under Hayes' current plan of reorganization, lenders holding roughly $790 million in claims would receive a pro rata portion of the pre-petition lender's payment amount and about 15 million shares of common stock in the reorganized company. If the company decides to implement either the additional equity modification or the asset transfer modification, the lenders will receive 50.1% of the new preferred stock or 50.1% of the shares of reorganized stock, respectively. The estimated recovery under the plan is 100%, but lenders to the pre-petition credit facility would be impaired under this scenario and are therefore entitled to a vote.
According to the bankruptcy court documents, the objecting lenders have claims to about $132 million. The group would need twice as much in claims to block the passage of the plan, which requires two-thirds consensus from its creditor groups. The key question is, one buysider explained, "How big is the group that intends to oppose the plan. If it does not represent 33% it will die on the vine."
The dissenting lenders have been trying to get more value out of their senior position in the capital structure (LMW, 2/2). "The objecting lenders respectfully suggest that a market based analysis of the value of their collateral inevitably will lead to the conclusion that the allocation of values proposed by the debtors does not in fact meet the best interests of creditors test and that the amended plan cannot be confirmed as a matter of law," stated the lenders' objection, according to bankruptcy court documents. Calls to James Yost, Hayes cfo, were referred to a spokeswoman. "Although our key constituents will support the plan, we will continue to work with our other creditors to finalize our plan of reorganization," she said. The confirmation hearing is set for April 9.