Doman Industries' unsecured creditors to meet June 7 to vote on plan

By Jeff Pines

Washington, May 3 - Doman Industries Ltd.'s unsecured creditors will meet June 7 to vote on a reorganization plan, the company said.

On Friday, it obtained the Supreme Court of British Columbia's approval authorizing the filing of a plan of compromise and arrangement.

The plan and other materials are supposed to be sent to affected creditors by May 11. If they approve the plan, the application for the sanction order will be heard on June 11, Doman estimated.

The proposed plan calls for the solid wood assets to be organized under the new Lumberco unit, which will be renamed later. Pulp assets would be held under another new unit, Pulpco, which will also be renamed later. Lumberco will take over as the public parent company. Doman plans to list Lumberco's stock with the Toronto Stock Exchange.

Holders of the unsecured debt of Doman and its subsidiaries, including its pre-petition trade debt, who do not choose cash will have their claims converted into 75% of the equity of Lumberco and warrants to buy another 12.5% of the common stock, according to the plan.

The debt held by the secured noteholders will be refinanced in full through a warrants offering to the unsecured claimsholders and a private placement to Tricap, affiliates of Merrill Lynch Investment Managers, Quadrangle Group LLC and Amaranth LLC. Secured noteholders will get new notes with a face value of $221 million with a 15% interest rate and 25% of Lumberco's common stock.

After the restructuring, Lumberco's only debt should be the secured notes, certain inter-corporate debt and a C$100 million credit facility with CIT Business Credit Canada Inc. There is a C$100,000 commitment fee.

Existing shareholders will get warrants to by up to a 10% stake in Lumberco.

Doman, a Duncan, B.C.-based forest products company is still looking for a buyer for its Port Alice mill. LaPointe Partners, Inc. is conducting its due diligence and is holding talks with the company and an affiliate of the Washington Group of Companies sent Doman Group a letter of intent. Two other interest parties have not submitted any letters of intent, KPMG, Doman's court-appointed monitor said in its report issued Wednesday.

Plan approval requires that at least two thirds of the impaired creditors to support it.

Doman filed for bankruptcy on Nov. 7, 2002.

KMPG also reported the company's business, at least in the short term, continues to improve.

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