Luxfer schemes of arrangement take effect

By Caroline Salls

Pittsburgh, Feb. 6 - Luxfer Holdings plc's scheme of arrangement between the company and the ultimate beneficial holders of its 10 1/8% senior notes due May 2009 and the scheme of arrangement between the company and some of its shareholders both took effect Tuesday following sanction of both schemes by the High Court of Justice, England and Wales, according to a company news release.

According to the release, the group has been burdened with high levels of debt against a backdrop of volatile raw material costs and exchange rates, and in response, has been implementing cost saving programs and profit improvement plans to drive both sales and margin growth.

Luxfer said the reorganization of its capital structure through these schemes of arrangement is intended to improve its financial condition through a significant reduction of debt and interest expense.

"The reorganization provides a more solid and stable capital structure for the group," chief executive Brian Purves said in the release.

"The substantial reduction in debt will increase our liquidity and enhance our ability to develop the business through investment."

As previously reported, under the terms of the reorganization, the noteholders will exchange their £131.4 million of existing senior notes and will invest about £3 million of new capital in return for £71.6 million of new senior notes and 87% of the post-reorganization share capital.

The new notes will have a new five-year maturity date.

Institutional and ex-management shareholders holding about 85% of current ordinary and preference share capital will receive £8.5 million in return for their stake.

As part of the reorganization, the 5% cumulative preference share capital will be converted into a combination of new ordinary share capital and deferred shares, which under International Financial Reporting Standards will reduce the company's balance sheet liabilities by £110.8 million, based on the accrued liability outstanding as of June 30.

In addition, some of the company's senior managers will exchange their current share capital for 13% of the post reorganization share capital.

Participation in the economic rights of this holding will initially be restricted to 5% and may grow to 13% of post-reorganization share capital based on growth targets.

The company said the proposed reorganization will eliminate the preference share liability and achieve a £60 million reduction in the group's senior unsecured debt, offset by a £10 million increase in senior secured debt to meet the funding requirements of the proposed reorganization.

The Luxfer Group is an international group of businesses that specialize in the design, manufacture and supply of high performance engineering materials, alloys and semi-fabricated components to manufacturing industry worldwide. It operates manufacturing plants in the Unites States, United Kingdom, Germany and Australia.

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