The FINOVA Group Inc. and Berkadia Announce Improved Terms For the FINOVA Plan of Reorganization
SCOTTSDALE, Ariz., May 30 /PRNewswire/ -- The FINOVA Group Inc. (NYSE: FNV - news) and Berkadia LLC, a joint venture of Berkshire Hathaway Inc. (NYSE: BRK.A - news, BRK.B - news) and Leucadia National Corporation (NYSE: LUK; PCX), announced today that they have agreed to modified terms for the proposed Joint Plan of Reorganization previously filed with the Delaware Bankruptcy Court by FINOVA and eight of its subsidiaries. Under the improved terms:
-- The interest rate on Berkadia's $6 billion loan to FINOVA Capital will
be LIBOR plus 225 basis points per year. The previously proposed
minimum rate of 9% per year and the annual 25 basis point facility fee
on this loan will be eliminated.
-- The proceeds of the $6 billion Berkadia loan will be used, together
with cash on hand, to make an aggregate cash payment to general
unsecured creditors of FINOVA Capital in an amount equal to
approximately $7.35 billion, which includes approximately $350 million
of post-petition interest (assuming an effective date of the Plan of
August 31, 2001). As a result, general unsecured creditors of FINOVA
Capital will receive a cash payment of approximately $.64 for each
$1.00 of pre-petition principal and interest claims plus $.03 of
post-petition interest for each $1.00 of their aggregate pre-petition
claims. New Senior Notes of FINOVA Group will be issued for the
balance of pre-petition claims (approximately $3.9 billion).
Provisions for a mandatory sinking fund on the New Senior Notes to be
issued by FINOVA Group will be eliminated.
-- The new ten-year Senior Notes of FINOVA Group will have an interest
rate of 7% per year.
In all other respects the terms of the Plan as previously filed with the Bankruptcy Court are unchanged.
Berkadia's commitment to these modifications will terminate if there is any agreement for or Bankruptcy Court approval of breakup, topping, due diligence or similar fees for any party other than Berkadia, whether or not any such agreement, approval or fee is subject to conditions or future events. Berkadia's commitment is not subject to due diligence or financing conditions and can be completed quickly.
Berkadia believes that Berkshire Hathaway, with approximately $1.428 billion principal amount of FINOVA Capital bank and bond debt is the largest holder of such debt, and following the reorganization, will become the largest holder of the New Senior Notes.
The debtors intend to file a revised Plan and Disclosure Statement with these modifications. The Bankruptcy Court has not approved these modifications or the Plan or Disclosure Statement previously filed. The solicitation process will not begin until the Bankruptcy Court approves the Disclosure Statement (as revised) and authorizes FINOVA to solicit the votes of their creditors and stockholders in connection with the revised Plan. Thereafter, FINOVA will send the revised Plan and Disclosure Statement to all creditors and stockholders who are entitled to vote on the Plan. |
