FiberMark files amended plan; noteholders, unsecured creditors can choose cash or stock recovery options

By Caroline Salls

Pittsburgh, Oct. 21 - FiberMark Inc. filed its fifth amended plan of reorganization and disclosure statement Thursday with the U.S. Bankruptcy Court for the District of Vermont that gives noteholders and general unsecured creditors a choice between an all cash distribution or part-cash, part-equity distribution.

The plan reflects a constituency agreement between AIG Global Investment Corp., Post Advisory Group and Silver Point Capital LP and gives secured noteholders and general unsecured creditors 70% recovery in cash consisting of distribution cash, settlement cash and stock purchase payment.

Alternatively, any noteholder other than AIG, Post and Silver Point that wants to receive equity in reorganized FiberMark can elect to receive a 62% recovery in new common stock, distribution cash and settlement cash.

Under the fourth amended plan, secured noteholders and general unsecured creditors were slated to recover 70% in cash and 10 million shares of the reorganized company. The new plan offers these creditors a choice between a cash recovery and an equity recovery.

The plan is based on a constituency settlement, which settles all issues arising from the examiner's report, including the causes of action and litigation rights against AIG and Post and the individual causes of action of Silver Point, AIG and Post against each other.

Under the settlement, on the effective date of the plan, AIG and Post will fund the settlement cash at an amount equal the lesser of $0.08 times the aggregate amount of all noteholder and general unsecured claims or $4.2 million.

AIG will be responsible for 75% of the settlement cash for a maximum of $3.15 million, and Post will be responsible for 25% up to a maximum of $1.05 million.

Silver Point will fund a stock purchase payment for a maximum payment of $21.6 million.

Also, Silver Point will purchase the $68.42 million of noteholder claims held by AIG for a purchase price of $41.33 million and Post's $53.68 million in noteholder claims for a purchase price of $32.27 million.

As a result, Silver Point will be entitled to receive AIG and Post's distributions of new common stock and distribution cash, leaving AIG and Post with no interest in the reorganized company.

Consistent with the examiner's recommendations, Silver Point will not share in the settlement cash, and it will use its share of the distribution cash to fund the stock purchase payment and to defray a portion of the purchase price of AIG and Post's noteholders claims.

Silver Point will be the single largest holder of noteholder and general unsecured claims and thus, will be the majority holder of new common stock, allowing to cast the deciding votes for the directors of reorganized FiberMark.

Creditor plan treatment

Treatment of creditors under the plan includes:

* Holders of $345.63 million in 9 3/8% senior notes due 2006 and $12.38 million in general unsecured claims will receive either 70% recovery in cash or 62% recovery in new common stock and cash; and

* Holders of $127 million in other secured claims will receive 100% recovery in deferred cash payments;

* Holders of old equity interests in FiberMark will receive nothing under the plan.

In his report, which was unsealed Aug. 19, examiner Harvey R. Miller cleared Silver Point of any claims trading improprieties and also concluded that there were no trading violations by FiberMark, its chairman and chief executive officer or any other employee or former employee.

Silver Point also was cleared of any breach of fiduciary duty.

However, the report found that the two other bondholder members of the creditors committee - AIG and Post - did breach their fiduciary responsibilities by using the creditors committee as a tool to further their self interests in connection with corporate governance disputes related to the company's plan and the pursuit of trading allegations against Silver Point.

FiberMark, a Brattleboro, Vt., producer of specialty fiber-based materials, filed for bankruptcy March 30, 2004. Its Chapter 11 case number is 04-10463.

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