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Dura 9% noteholders denounce company's backstop rights purchase agreement with Pacificor
By Reshmi Basu
New York, Oct. 2 - Dura Automotive Systems, Inc.'s 9% senior subordinated noteholders objected to proposed amendments to the company's backstop rights purchase agreement, arguing that the plan has not been subjected to any sort of market test, according to a Tuesday filing with the U.S. Bankruptcy Court for the District of Delaware.
On Friday, the company filed an amended plan of reorganization and related disclosure statement that changed the distribution to senior noteholders to allow Dura to exit bankruptcy as a private company, which "would make what is already a bad deal for the debtors' estate even worse," the noteholders said in the court document.
As previously reported, Dura noteholder Pacificor, LLC has agreed to underwrite 100% of the company's rights offering.
Under the new plan, Pacificor can terminate the backstop rights purchase agreement if there are 300 or more holders of new common stock on the plan effective date.
The 9% noteholders assert that Dura will become a private company with Pacificor having the right to purchase the shares to ensure that the new common stock will not have to be registered or it can choose to terminate the backstop agreement.
The 9% noteholders contend that those proposed changes devalue the backstop agreement by adding "a new and significant contingency to Pacifor's obligation to perform - for which Pacificor is apparently given no consideration in return."
The hearing on approval of the disclosure statement is scheduled for Oct. 3.
Dura, a Rochester Hills, Mich.-based automotive parts maker, filed for bankruptcy on Oct. 30, 2006. Its Chapter 11 case number is 06-11202.
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