WORLDTEX ENTERS CH. 11 WITH RESTRUCTURING PLAN
NEW YORK — Worldtex Inc. on Monday made good on its promise to restructure through a Chapter 11 bankruptcy court protection filing in Delaware.
The filing, which included a plan of reorganization and disclosure statement, had been prenegotiated with an informal committee of noteholders.
As reported, Worldtex in January entered into a lockup agreement with the committee, which held 64 percent of the company’s $187 million in 9.6 percent senior notes. The restructuring would cancel all outstanding principal and all accrued and unpaid interest on the senior notes in exchange for 98 percent of newly issued common stock in the company, subject to dilution, and a 12 percent preferred stock, with an aggregate face amount of $30 million.
Existing Worldtex common stock would be canceled and holders would receive 2 percent of the new common stock, subject to dilution, and warrants for 10 percent of the fully diluted new common stock exercisable at a price at which the senior noteholders will have received a 100 percent recovery on the principal of the notes.
Worldtex has a debtor-in-possession financing facility in place from its existing lenders.
The company, which is engaged in the covered elastic yarn and narrow elastic fabric markets, in 1998 and 1999 made some acquisitions and managed to grow the company, but fell on tough times recently.