Schaumburg-based Pliant's reorganization hits roadblock

The reorganization plan for Pliant Corp. hit a roadblock in the form of what the creditors' committee believes to be a superior offer from Apollo Management LP.

Pliant, a manufacturer of flexible packaging and plastic films, filed under Chapter 11 in February with a reorganization plan proposing to give all the new stock to the holders of $393 million in first-lien notes. Other creditors, including the holders of $262 million in second-lien notes, would receive warrants to buy new stock.

According to the committee, New York-based Apollo made a non-binding proposal to sponsor a plan in which the first-lien lenders would realize the value of their collateral by receiving $75 million cash and $156 million in new first-lien notes.

For unsecured creditors, Apollo is proposing 17.5 percent paid in cash. Second-lien noteholders would receive common stock including the right to force the company to buy the equity. Apollo would backstop the so-called put with $175 million.

The committee says the Apollo plan outline is "vastly better" for all stakeholders. Apollo, according to the committee, has arranged $150 million in exit financing.

Pliant also has $26.3 million in subordinated notes. The secured $167 million credit agreement is to be paid in full under the company's plan. The company plan is supported by holders of more than two-thirds of the first-lien notes.

At the request of the committee, a hearing to have been held yesterday for approval of Pliant's disclosure statement was pushed back to June 11. The committee is also asking for termination of Pliant's exclusive right to propose a plan so the Apollo reorganization can be brought forward.

Pliant is in Chapter 11 a second time. It confirmed a Chapter 11 reorganization plan in June 2006 that left the second-lien notes in place without reducing the amount of the debt. The company plan this time almost would wipe out the second-lien notes.

The petition listed assets of $689 million against debt of $1.03 billion as of Sept. 30. Revenue for the first nine months of 2008 was $881 million. In 2007, sales were $1.1 billion. Pliant has 21 plants.

The new case is In re Pliant Corp., 09-10443, U.S. Bankruptcy Court, District of Delaware (Wilmington).