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NATIONAL GYPSUM CREDITORS' COMMITTEE ANNOUNCES REORGANIZATION PLAN

NATIONAL GYPSUM CREDITORS' COMMITTEE ANNOUNCES REORGANIZATION PLAN
 DALLAS, Jan. 16 /PRNewswire/ -- The Committee of Bond and Trade Creditors in National Gypsum Company's Chapter 11 case today announced it is filing the outline of a reorganization plan unanimously supported by committee members holding all issues of the company's outstanding bonds as well as its trade debt. The committee also said its plan incorporates an agreement with the committee representing present asbestos claimants. The United States Trustee previously appointed the Bond and Trade Committee as the sole committee to represent all bondholders and trade creditors. The committee contemplates filing with the bankruptcy court next week outlines of its plan and agreement with the asbestos committee.
 "I am pleased that the committee could formulate a consensual Chapter 11 plan that dramatically rehabilitates the company's balance sheet and provides a foundation for the company to exit the Bankruptcy Court on the near future," stated Committee Chairman W. Barnes Hauptfuhrer. Hauptfuhrer emphasized that the committee's plan is the result of a "hard-fought compromise" among the four disparate creditor interests represented by the committee.
 The committee's plan will provide the holders of the company's 11-3/8 percent senior subordinated notes with debt securities in the full face amount of such claims. Trade creditors with claims of $15,000 or less will be paid in full in cash. Holders of trade claims in excess of $15,000 will receive the same debt securities as the holders of the 11-3/8 percent bonds, but in an amount equal to approximately 90 percent of their claims. Debt securities to be distributed to the 11-3/8 percent bond and trade creditors will include $150 million of 10 year, 10 percent notes and $182.33 million of 7 year, 16 percent debentures. The 16 percent debentures may be paid interest in cash, or interest may be accrued, at the option of the board of directors of the reorganized company. If such interest in cash, has not been paid in cash for six semi-annual payment periods, and all or part of the debentures have not been refinanced, such debentures may be converted by the board of directors into common stock of the reorganized company, up to a maximum of 60 percent of the fully diluted common stock of the company.
 Pursuant to the plan, holders of the company's 14-1/2 percent subordinated debentures will receive 65.34 percent of the common stock of the reorganized company, and the holders of the company's subordinated discount debentures will receive 34.66 percent of the common stock. If the company's board of directors determines after three years that it is appropriate to convert the 16 percent debentures issued to the 11-3/8 percent and trade creditors into equity, the common stock initially allocated to the 14-1/2 percent and 15-1/2 percent could be diluted to no less than a total of 40 percent of the fully diluted common stock of the company. Such dilution would be on a pro-rata basis based on the initial ownership percentages provided to each creditor class. Hauptfuhrer added: "the committee's reorganization plan is responsive to the cyclical nature of the company's business and the severely depressed level of wallboard prices that presently prevail in the marketplace (which are currently over 40 percent below their 1986 peak.) It is my expectation that no conversion of the 16 percent debenture will ever be required and that the 16 percent debentures will likely be fully cashed out through a refinancing."
 Additional consideration may have to be paid to satisfy various environmental claims to the extent the court validates them.
 Pursuant to the committee's plan, the reorganized company will be insulated from asbestos and asbestos-related claims.
 Wilbur Rose, managing director for Rothschild, Inc., the financial advisor to the Bond and Trade Committee, said, "the Bond and Trade Committee's plan allocates the value of the National Gypsum Company among creditors by paying creditors according to their seniority ranks and preserving future appreciation for the most junior creditors after senior creditor are paid." Ross further explained that the Committee's plan will enable National Gypsum Company's Wallboard business to remain competitive and grow and will not require any reduction in the number of persons employed by National Gypsum Company. Ross added that the Committee developed its plan because National Gypsum's management has consistently demonstrated bad faith in negations and its management of the ongoing enterprise.
 Previously, current management for National Gypsum Company asked the Bond and Trade Committee said: "The committee for a Chapter 11 plan containing a capital structure requiring the substantial extinguishment of at least half the bond claims without providing any real prospect of recoupment, committee members said.
 Martin Bienenstock of Weil, Gotshal & Manges, attorneys for the Bond and Trade Committee is proud to have developed a chapter 11 plan satisfying the letter and spirit of reorganization law. The plan improves the company, saves jobs. allocates value fairly, and is socially responsible to all asbestos claimants.
 "It is unfortunate and regrettable that National Gypsum's management has not supported the agreement of the representatives of over $1 billion of the company's bond and trade debt," Bienenstock said. He added" "It appears to the Bond and Trade Committee that it is dealing with a company whose management is without portfolio."
 The Committee of Bond and Trade Creditors also announced that Victor H. Palmieri will serve as nonexecutive chairman of the board of directors of the reorganized National Gypsum Company. The Palmieri Company will provide supplemental management and other services to the extent necessary. Palmieri will continue to serve as chief executive officer of Mutual Benefit Life Insurance Company. The committee said it is committed to providing the company the leadership and support to lead the industry, grow and prosper for the benefit of its employees, customers, creditors and new shareholders. "We are extremely fortunate that Victor Palmieri and the Palmieri Company are willing to lead the new National Gypsum Company," Bienenstock said.
 -0- 1/16/92
 /CONTACT: Wilbur L. Ross, Jr. of Rothschild Inc., 212-757-6000, Martin J. Bienenstock of Weil, Gotshal & Manges, 212-310-8000, or W. Barnes Hauptfuhrer of First Union National Bank of North Carolina, 704-374-4806/ CO: National Gypsum Company ST: Texas IN: SU: RCN SH-SM -- NY054 -- 0595 01/16/92 14:25 EST
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Publication:PR Newswire
Date:Jan 16, 1992
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