Bankruptcy judge OKs SCI plan to escape Ch. 11
The decision marks the first foray into broadcasting for Perelman, who controls Revlon Inc. and Marvel Entertainment, the latter through his MacAndrews & Forbes Holdings Inc.
Early in Thursday's confirmation hearing, bankruptcy judge Helen Balick approved a settlement between SCI and its unsecured creditors resolving a contentious dispute that threatened to delay the company's emergence from Chapter 11.
According to SCI attorney Bruce Toth and testimony by company vice president David Ramon, the settlement gives senior unsecured creditors $ 8 million in cash in addition to the $ 17.7 million in stock and warrants -- equal to 13% of the common stock -- they received under the original plan. That improves the payout to debtholders to 6.6 cents from 4.6 cents on the dollar.
Of the $ 8 million in cash, $ 6 million comes from SCI. The $ 2 million balance comes from belt-tightening at the company and its advisers. For example, several law firms agreed to reduce their take by $ 500,000; Smith Barney, SCI's investment banker, agreed to a $ 1 million reduction; and management reduced by $ 500,000 their post-confirmation compensation.
The plan calls for a $ 100 million investment by Perelman through Andrews Group in exchange for 52% of SCI equity. Andrews is a wholly owned subsidiary of MacAndrews & Forbes.
In addition, SCI will buy the CBS affiliate WTVT in Tampa, Fla., from Gillette Holdings Inc. for $ 163 million.
Attorney Toth said the plan would have to become effective by May 28 in order to meet the FCC timetable for approving a change in control of the company and license renewals for two of SCI's six TV stations. SCI has stations in San Diego , Detroit, Boston, Milwaukee, Atlanta and Cleveland.
On the effective date, there will be nine directors on the board, four selected by the bank debtholder committee and five by the Andrews Group. Perelman will be chairman of the board.
On March 4, SCI filed for Chapter 11 bankruptcy protection, replacing an involuntary bankruptcy filed two days earlier by four debtholders. Those creditors received nothing under the plan.
Senior secured bank debtholders will receive new debt equal to $ 2.5% of their claims and 35% of common stock. The plan requires SCI to list the stock on an exchange not yet identified; share value is estimated at $ 9.
Current shareholders and holders of $ 259 million of subordinated public debt receive nothing under the plan.
