Some senior lenders to Apollo Global Management LLC’s (APO:US) Momentive Performance Materials Inc. said they want to change their vote on the chemical company’s bankruptcy plan to “yes” so they can collect a cash payment.
Momentive Performance had offered the senior lenders full repayment in cash but no premium to compensate for early redemption of their notes if they voted in favor of the plan. If they voted against it, they were entitled to replacement liens, not cash.
This week, some of those lenders said they were willing to drop their opposition after U.S. Bankruptcy Judge Robert Drain criticized them for not taking the cash. The judge gave them a day to negotiate with the Waterford, New York-based company, which makes silicone and quartz products.
After they returned to court without a settlement, Drain ruled that the lenders had no enforceable right to the premium and gave the reorganization plan his conditional approval, saying Momentive Performance had to raise the rates on some of the debt being issued under the new plan.
In court papers filed yesterday and today, two classes of “requisite” noteholders asked to change their votes: holders of first-lien debt, 8.875 percent notes due in 2020; and holders of so-called 1.5-lien debt, 10 percent notes due in 2020. They also asked for an expedited hearing on their request because Momentive Performance has set Sept. 9 for the hearing on plan confirmation.
The first-lien lenders said in a filing yesterday that they want to vote in favor of the plan so they can get the cash, without the premium. The 1.5-lien holders followed with court papers today joining that request.
“Among other things, doing so would end any additional cost and expense, and lead to a consensual resolution of these cases as they relate to the first-lien noteholders,” according to the filing by the first-lien group.
The proposed plan represents the best opportunity for the 1.5-lien holders to “realize on their claims,” that group said in its filing.
In the original vote, 88.6 percent of all first-lien noteholders rejected the plan, representing 91.9 percent of the dollar amount.
With 79 of those noteholders now wishing to change their votes and 23 already having voted to accept the plan, more than half of the 201 holders voting now favor it, according to court papers.
The 8.875 percent noteholders’ claims total $876.4 million, or about 83.8 percent in dollar amount. Pooling their votes with those of the first-lien lenders who previously approved the plan would result in acceptance of about 92 percent by dollar amount, according to court papers.
Under the Bankruptcy Code, a plan is approved by a class of creditors when a majority of the class members vote in favor and those who vote in favor hold at least two-thirds of the value of the claims in that class.
Momentive Performance filed for bankruptcy protection in April after struggling to meet payments on debt dating to its $3.8 billion buyout by Leon Black’s Apollo in 2006. Momentive Performance listed $2.69 billion in assets and $4.17 billion in debt in its Chapter 11 filing in April.
The bankruptcy plan was negotiated by Momentive Performance, Apollo and a committee that represents holders of second-lien secured debt. Most of the reorganized company’s stock would go to holders of $1.34 billion in 9 percent second-lien notes.
The case is In re Momentive Performance Materials Inc., 14-bk-22503, U.S. Bankruptcy Court, Southern District of New York (White Plains).
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