Allied Holdings' settlement allows Yucaipa to share subordinated claims class with equity holders

By Caroline Salls

Pittsburgh, April 24 - Allied Holdings, Inc. obtained court approval of a settlement agreement that allows Yucaipa American Alliance Fund I, LP and Yucaipa American Alliance (Parallel) Fund I, LP to share their participation in one class under Allied's plan of reorganization with equity holders, according to a schedule 13D filed with the Securities and Exchange Commission.

The parties to the settlement agreement include Allied, its official committee of unsecured creditors, Yucaipa, equity holders Sopris Capital Advisors, LLC and Aspen Advisors, LLC and Armory Advisors LLC, Andrews & Kurth LLP, Sonnenschein Nath & Rosenthal LLP, Kilpatrick Stockton LLP and Jefferies & Co., Inc.

Under the terms of the settlement agreement:

• Claims in plan class 4D, the subordinated general unsecured claims class, will be amended to provide that at least $40 million of claims may be tendered into that class in return for cash payouts of at least $0.25 on the claim dollar. If the tendered claims exceed $40 million in face amount, the treatment for tendered claims in that class will be a cash payout equal to a share of the total cash consideration allotted for payout of those claims;

• Yucaipa will share its participation in class 4D of the plan with the equity holders, giving the equity holders the right to purchase from Yucaipa up to 20% of the claims that participate in the cash out option provided under the plan;

• On the plan's effective date, the equity holders will pay their share of the cash necessary to fund the cash out option to reorganized Allied, which will in turn distribute the equity holders' cash and other cash provided by Yucaipa to holders of class 4D claims.

The equity holders will receive the same share of either the claims that were tendered into class 4D or the equity of reorganized Allied, into which those claims are converted under the plan; and

• Allied has agreed to pay up to $525,000 of the fees and expenses incurred by Andrews & Kurth LLP, Sonnenschein Nath & Rosenthal LLP and Kilpatrick Stockton LLP in connection with their representation of parties involved in Allied's bankruptcy case.

Allied, a Decatur, Ga., distributor of new and used vehicles, filed for bankruptcy on Aug. 1, 2005. Its Chapter 11 case number is 05-12515.

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