Byline: RICH WILNER
NEW YORK -- Jamesway Corp. filed its Chapter 11 plan last week calling for unsecured creditors to receive roughly 50 cents on the dollar in cash and stock.
The Secaucus, N.J.-based discounter also reported that it completed a $100 million post-Chapter 11 financing deal with CIT Group/Business Credit Inc.
At the same time, the unsecured creditors' committee has been unable to resolve a $20 million disagreement with Jamesway over the size of the payout. The committee filed a motion to terminate Jamesway's exclusivity in order to file its own plan, which calls for a 50 percent greater cash payout, at the minimum.
In response, Jamesway said one member of the seven-member committee, Foothill Capital Group, which owns 18 percent of Jamesway's unsecured debt, was steering the group for its own gain.
"Foothill and perhaps a few other select creditors are proving that they only care about making a quick profit at the expense of most of the trade and other unsecured claims," Howard Curd, Jamesway's chairman and acting chief executive officer, said in a statement.
Curd said he believed the challenge to Jamesway's plan was tied to Foothill's unsuccessful attempt to win the post-petition financing deal.
After an unsuccessful attempt to purchase Jamesway before it filed its Chapter 11 petition last July, Foothill purchased senior and trade claims at "substantial discounts" during the reorganization, Deryck A. Palmer, of Weil, Gotshal & Manges, counsel to Jamesway, told WWD.
Lester A. Kirshenbaum, of Kaye, Scholer, Fierman, Hayes & Handler, who is the counsel to the creditors' committee, called the attacks on Foothill "unfortunate" and also said they don't reflect the nature of the negotiations.
"The entire seven-member committee, comprising three trade members, one subordinated public debt holder, one landlord and two senior debt holders, backed the move to cut short exclusivity and file the competing plan," Kirshenbaum said.
Wilbur Ross, a senior managing director at Rothschild Inc., financial adviser to the committee, said the committee opposed the Jamesway plan because recoveries are too low and exit financing is too restrictive.
Under Jamesway's plan, the roughly $223 million in general unsecured claims will be settled with $40 million in cash plus 100 percent of the common stock, valued at about $70 million. If unsecured creditors vote against the plan, but it is still approved, they will receive an all-stock payout, which would increase in value by the $40 million in cash retained by Jamesway, the company said.
The proposed creditors' committee plan calls for the same $40 million cash and common stock payout. It adds a preferred stock payout that must be redeemed by Jamesway for $20 million if the retailer hits its EBITDA predictions in the year ending January 1995.
Also, the proposed plan calls for unsecured creditors to receive 50 percent of any profits in excess of the EBITDA plan.
-- Fairchild News Service