An acquisition proposal by two of Oneida“s shareholders could take precedence over the bankrupt company“s bid to reorganize, according to a source close to the case.
During a confirmation hearing, …
An acquisition proposal by two of Oneida“s shareholders could take precedence over the bankrupt company“s bid to reorganize, according to a source close to the case. During a confirmation hearing, Judge Allan Gropper of the US Bankruptcy Court for the Southern District of New York in Manhattan indicated that the offer by D.E. Shaw Laminar Portfolios LLC and Xerion Capital Partners LLC would beat the debtor“s current reorganization plan once binding agreements are entered, the source said. Valuation testimony was taking place Wednesday, 12 July 2006 the source added. Xerion is the largest equity holder in New York-based Oneida, while D.E. Shaw also holds a significant amount of the company“s stock. The bid, according to the source, would fully satisfy Oneida“s creditors while providing value to equity holders, who have been in conflict with the bankrupt company since the beginning of the case. Oneida“s current plan would see its shareholders lose the entire value of their stock, with the company swapping its tranche B debt for 100% of new common stock. Court papers filed as a joinder to the equity committee“s objection to the extension of Oneida“s exclusivity period show that D.E. Shaw and Xerion had “proposed a term sheet containing improved plan recoveries”, although the sale was not specifically mentioned. In the equity committee“s objection, it claimed that the panel would be able to formulate and file a confirmable reorganization plan “in quick fashion” , should Oneida“s current plan be rejected. “The equity committee has the wherewithal, through the resources of its members and professionals, to put together a feasible plan of reorganization that will provide for, among other things, the fair and equitable treatment of all classes of claims and interests”, the objection reads. Prior to the hearing, Oneida had continued to fight equity holders, describing objections to the company“s reorganization plan, its proposed settlement with the Pension Benefit Guaranty Corp. (PBGC) and its exclusivity periods, amongst others, as “efforts to extort value” from the estates. The two parties have disagreed on issues such as valuation since the equity committee won the right to official representation in the case. The committee has claimed that the debtor“s reorganization plan would squeeze minority shareholders out of value. Oneida, however, argued as recently as 10 July 2006 in court papers that the swap is insufficient to cover all of its tranche B debt, and that there would no residual value left for equity. In addition, the debtor, whose official unsecured creditors committee is set for a full recovery under the plan, noted in court papers that it sought to implement a settlement with the PBGC that would subordinate a claim of more than USD 50 million in return for the termination of an Oneida pension plan. That claim would be superior only to equity holders. “The proposed PBGC settlement was achievable because the PBGC recognized that value stops at the tranche B lenders and, for that reason, was willing to settle its valuable claim for pennies on the dollar”, Oneida said in the 10 July 2006 filing. Oneida“s equity holders had argued that the PBGC claim was “grossly overstated”, and that based on a valuation from their financial adviser, Imperial Capital LLC, the claim was closer to USD 20 million. The company has about USD 118 million in tranche A debt; USD 107 million in tranche B debt, and a USD 12 million secured PBGC claim, according to the debtor“s court filings. Oneida, a maker of stainless steel utensils, ceramic plates and crystal, filed for Chapter 11 on 19 March 2006 in the New York court.