05 JULY 2013Platts
Ormet unsecured creditors get better deal under new settlement
Edited by : AL CIRCLE
1 min read
General unsecured creditors of Ormet will share in a $2 million if Minnesota's Wayzata Investment Partners closes on its pending $282 million purchase of the bankrupt US aluminum producer at the end of July, according to a new bankruptcy court filing.
The $2 million benefit for unsecured creditors is double the original amount suggested in an asset purchase agreement approved June 4 by a federal bankruptcy judge.
The eventual benefit to unsecured creditors could be even higher if Ormet, currently in a "distressed" financial condition, returns to profitability, a source involved in the case said Wednesday.
Under the settlement agreement filed this week with the US Bankruptcy Court for the District of Delaware by attorneys for Ormet and the unsecured creditors, warrants equal to 2.5% of the equity of Wayzata would be provided to unsecured creditors.
"If, in fact, [Ormet] becomes more valuable, then those warrants could become 'in the money' warrants and add more value to the distribution of unsecured creditors," the source said. "Even though the company is now distressed, we have an upside."
The $2 million benefit for unsecured creditors is double the original amount suggested in an asset purchase agreement approved June 4 by a federal bankruptcy judge.
The eventual benefit to unsecured creditors could be even higher if Ormet, currently in a "distressed" financial condition, returns to profitability, a source involved in the case said Wednesday.
Under the settlement agreement filed this week with the US Bankruptcy Court for the District of Delaware by attorneys for Ormet and the unsecured creditors, warrants equal to 2.5% of the equity of Wayzata would be provided to unsecured creditors.
"If, in fact, [Ormet] becomes more valuable, then those warrants could become 'in the money' warrants and add more value to the distribution of unsecured creditors," the source said. "Even though the company is now distressed, we have an upside."
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