The weeks of waiting for a decision in the Oneida Ltd. bankruptcy case came to an end with the ruling on 30 August 2006 from Judge Allan Gropper of the US Bankruptcy Court for the Southern District of…
The weeks of waiting for a decision in the Oneida Ltd. bankruptcy case came to an end with the ruling on 30 August 2006 from Judge Allan Gropper of the US Bankruptcy Court for the Southern District of New York in Manhattan that confirmed the debtor“s plan. As a result, Oneida expects to emerge from Chapter 11 protection on or about 12 September 2006 according to debtor counsel Douglas Bartner of Shearman & Sterling LLP. Although an appeal is possible, sources close to the proceedings suggested that it would be unlikely that equity holders, who had battled with the debtor throughout the case, would take that route. “I haven“t spoken with [the equity] committee yet, but we“re going to explore whatever appellate rights we“ve got”, said Robert Stark, counsel to the official equity committee at Brown Rudnick Berlack Israels LLP. In his ruling, Judge Gropper dismissed claims by the official equity committee that the company was solvent, was trying to squeeze out minority shareholders, and that Oneida“s lenders were trying to buy the company on the cheap. “The equity committee not only failed to produce a single document that provides palpable support for this proposition, it did not elicit any testimony that directly supports its allegation of improper control on the part of the lenders or an ulterior purpose on the part of the directors or the lenders”, Gropper wrote. Gropper also concurred with the debtors and their financial advisers, Credit Suisse Group, as well as the advisers of the unsecured creditors and lenders in their assessments of valuation, noting a total uncontested debt figure of at least USD 261.5 million. “It is obvious why no expert other than … [equity committee financial adviser] Imperial Capital LLC found any value in the equity”, Gropper wrote. “Even Imperial Capital“s low point would have provided no value to the equity”. Credit Suisse“s midpoint valuation lay at USD 210 million, while Imperial“s was set at USD 295 million. As a result of the ruling, the debtor“s plan goes ahead and current equity will be cancelled. All of Oneida“s new equity will be handed over to tranche B lenders in return for the cancellation of debt. The ruling came weeks after the conclusion of six days of tense confirmation hearings and was made after Oneida“s two-track strategy was reduced to one option. Oneida“s two largest shareholders, Xerion Capital Partners LLC and D.E. Shaw Laminar Portfolios LLC, had attempted to buy up the company, floating an offer through a letter of intent (LOI) that would have paid either USD 222.5 million or enough to pay off all creditors in full in order to gain all of Oneida“s equity and leave an element of consideration to other shareholders. The company was proceeding on confirmation of its own plan while negotiating with Xerion and D.E. Shaw. However, the LOI expired on 21 July 2006 without a deal, although the precise reason for this outcome remains unclear. Under the confirmed plan, all of Oneida“s USD 118 million in tranche A secured debt will be paid off, while USD 107 million in tranche B debt will be swapped for all of the company“s equity. Oneida“s unsecured claims, which court papers have valued at about USD 8.2 million, will also be paid off. The PBGC (Pension Benefit Guarantee Corporation) will receive a USD 3 million promissory note in return for its USD 2.7 million unsecured claim and the cancellation of an Oneida pension plan. Pursuant to a settlement between the debtor and the federal agency will subordinate a claim valued between USD 21.1 million and USD 56.2 million in favor of every class but equity holders. That claim will receive no distributions. Oneida“s emergence from bankruptcy will be funded by a USD 170 million exit financing package- part, which will refinance the tranche A debt, provided by affiliates of Credit Suisse. The Cayman Islands branch of Credit Suisse is administrative agent, while Credit Suisse Securities (USA) LLC is lead arranger and sole bookrunner, filings show. Credit Suisse Securities is also Oneida“s financial adviser and investment banker. The loan consists of USD 80 million five-year revolver and a USD 90 million six-year term loan. “The company“s looking forward to emerging with a much stronger balance sheet”, an Oneida representative said. Oneida, a maker of stainless steel utensils, ceramic plates and crystal, filed for Chapter 11 on 19 March 2006 in the New York court.