K-V Pharmaceutical disclosure approved; plan hearing set for Aug. 28

By Caroline Salls

Pittsburgh, July 17 - K-V Pharmaceutical Co. received court approval of the disclosure statement for its sixth amended plan of reorganization, according to a July 17 filing with the U.S. Bankruptcy Court for the Southern District of New York.

The plan confirmation hearing is scheduled for Aug. 28.

The company said the plan will be funded by the proceeds of a sale of rights offering stock and direct purchase shares, which will be used to provide up to $275 million in capital to reorganized K-V.

Convertible subordinated noteholders who are accredited investors will be eligible to participate in the $238 million rights offering.

The rights exercise price will be $20 per share.

The plan investor parties include Capital Ventures International, Greywolf Capital Overseas Master Fund, Greywolf Capital Partners II LP, Greywolf Opportunities Fund LLC, Kingdon Associates, Kingdon Credit Master Fund LP, Kingdon Family Partnership, LP, M. Kingdon Offshore Master Fund LP and Deutsche Bank Securities, Inc.

Creditor treatment

Under the proposed sixth amended plan,

• Priority non-tax claims will be paid in full;

• Holders of other secured claims will either receive cash or another treatment that renders their claims unimpaired;

• Senior secured noteholders will receive a share of $231.41 million in cash, post-bankruptcy interest and any post-bankruptcy accreted OID amount;

• Convertible subordinated noteholders will receive a share of 7% of the new common stock to be issued by reorganized K-V, subject to dilution;

• Holders of general unsecured claims will receive a share of $10.25 million in cash, provided that no holder will receive more than 100% of its claim;

• Holders of Ethex criminal fine claims and Qui Tam claims will receive a $10 million distribution to be paid by K-V in accordance with a claims payment schedule; and

• No distributions will be made on account of securities law claims, equitably subordinated claims or existing K-V interests.

K-V Pharmaceutical, a St. Louis specialty pharmaceutical company, filed for bankruptcy on Aug. 4, 2012. Its Chapter 11 case number is 12-13346.

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