Foamex files plan of reorganization; unsecured creditors to recover up to 5% of $1.5 million reserve

By Caroline Salls

Pittsburgh, Dec. 23 - Foamex International Inc. filed its plan of reorganization and related disclosure statement on Friday with the U.S. Bankruptcy Court for the District of Delaware, giving unsecured creditors up to 5% recovery in their share of a $1.5 million distribution reserve.

The plan gives 100% of the new common stock in the reorganized company to holders of the company's 10¾% senior secured notes due 2009, subject to dilution by a management incentive plan and warrants issue.

Holders of the company's 13½% senior subordinated notes due 2005 and 9 7/8% senior subordinated notes due 2007 will receive warrants to purchase up to 5% of new common stock if they vote to accept the plan.

Under the plan of reorganization:

• Holders of $243.95 million in debtor-in-possession financing claims will receive 100% recovery in cash;

• Holders of other secured claims will receive 100% recovery by either retaining the collateral securing the claim or reinstating the claim by curing all outstanding defaults, payment in full in cash;

• Holders of $312.45 million in secured note claims will receive 67% recovery in 100% of the 15.84 million shares of new common stock to be issued under the plan;

• Holders of $208.15 million in senior subordinated note claims will receive 1% recovery in new common stock warrants if they vote to accept the plan;

• Holders of general unsecured claims will receive up to 5% recovery in their share of cash from a $1.5 million general unsecured claim distribution reserve;

• Holders of equity interests in the company's surviving subsidiaries will retain their interests for 100% recovery; and

• Holders of subordinated claims and old common stock and other equity interests will receive no distribution under the plan.

The company said it expects to secure exit financing and to obtain a $30 million term loan facility from holders of the senior secured notes.

An approval hearing for the disclosure statement is scheduled for Jan. 26.

Foamex, a Linwood, Pa., manufacturer and distributor of flexible polyurethane and advanced polymer foam products, filed for Chapter 11 on Sept. 19. Its case number is 05-12685.

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