MGRE, MAJOR CREDITORS GIVE CH. 11 PLAN TO COURT

Byline: Carol Emert

WASHINGTON--Less than 14 months after filing for Chapter 11 protection, Merry-Go-Round Enterprises Inc. and its major creditors on Thursday submitted a formal plan of reorganization in federal bankruptcy court in Baltimore.
The company will meet its to goal to emerge from bankruptcy on June 30 or shortly thereafter, said Thomas Shull, chairman and president.
The filing was expected since it is basically the same as an outline that Merry-Go-Round and creditors agreed to in December. The company's distributable value remains at $280 million. Unsecured creditors, who are owed an estimated $225 million, are slated to receive 100 cents on the dollar. Up to $130 million of the payout will be in cash and market rate debt securities. The remainder will be in stock representing a 75 percent stake in the reorganized company.
Current shareholders are expected to receive stock representing a 25 percent stake in the new MGR. Up to 15 percent of this part of the payout will be in warrants if unsecured claims exceed $225 million.
Two secured creditors, Aid Association for Lutherans, a pension company owed $10 million, and Bear, Stearns & Co., which purchased a $5 million claim from Signet Bank, will receive cash distributions.
Bear, Stearns is also one of the largest unsecured creditors, along with Fidelity Investments. Both have signed off on the plan.
The company's next steps are to secure exit financing and to turn around its flagging sales. Shull said sales have been above plan for most of the last 10 days, "which indicates that we're turning the corner." He added that he anticipates meeting plan for EBITDA (earnings before interest, taxes, depreciation and amortization) this month.
Rothschild Inc., the equity committee's adviser, is working on securing exit financing, which will be used to make the creditor distributions and fund operations.
-- Fairchild News Service

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