More than one year after filing for Chapter 11 bankruptcy protection, Classic
Communications Inc. has emerged with new cash for operations and new owners.
According to Classic's reorganization plan, approved by U.S. Bankruptcy Court
Judge Peter Walsh Dec. 26, the MSO will restructure its debt, allowing
bondholders to convert their claims for a 52 percent equity interest in the
The bondholders that stand to receive the most equity are OCM Principal
Opportunities Fund II -- also Classic's largest unsecured creditor and co-author
of the amended plan -- and Goldman Sachs Credit Partners, a co-author of the
plan and the MSO's largest secured creditor.
OCM II is a private equity-distressed debt fund managed by Oaktree Capital
Management LLC. GSC is affiliated with New York-based investment bank The
Goldman Sachs Group Inc.
Classic will emerge with between $70 million and $80 million in cash -- $20
million from a new credit financing and another $50 million to $60 million
through the issuance of preferred stock.
The MSO said in previous filings that the bulk of the proceeds from the
preferred-stock offering would go toward paying off an existing $30 million in
debtor-in-possession financing. In addition, the company's banks will exchange
their $200 million in claims for claims for newly issued term notes.
According to previous filings, Classic plans to issue about $60 million in
Term A notes, $82 million in Term B notes and $40 million in subordinated
President Dale Bennett will remain in that role and will receive a seat on
the reorganized Classic's board of directors. Classic will have seven board
members in total -- two appointed by the creditors' committee (attorneys Harry
Perrin and Edward Shapiro) and four named by OCM (Stephen Kaplan, Ronald Beck,
B. James Ford and Michael Harmon).
Classic filed for Chapter 11 protection in November 2001 in Delaware, listing
assets of $711.3 million and liabilities of $641.8 million.