The deeply indebted Finova Group Inc., which announced Tuesday that it had arranged a $6 billion loan commitment from Leucadia National Corp. and Berkshire Hathaway Inc., provided more details about its restructuring plan on Wednesday.

The Scottsdale, Ariz., financial services holding company, which is headed for bankruptcy court, said it would use the $6 billion senior secured five-year term loan to pay down its existing bank and publicly traded debt, which totals $11 billion. But some creditors and bondholders would be paid after Berkshire Hathaway, of Omaha, and New York-based Leucadia.

The term loan would be secured by all assets of Finova's principal operating subsidiary, Finova Capital Corp. The company agreed to pay quarterly interest of either 9% or the London Interbank Offered Rate plus 3%, whichever is higher, as well as an annual facility fee of 25 basis points on the outstanding principal. It also said all excess cash flow would be applied to repaying the loan.

Finova's remaining $5 billion of debt would be converted into new 10-year senior notes, which would be paid after the loan.

After the loan is paid, excess cash flow would be used to pay dividends on trust preferred securities. After that, 95% of the remaining capital would be used to make payments on principal senior notes and distributions to common stockholders. The remaining 5% will be used for distributions to preferred stockholders, Finova said.

Observers said the order in which creditors would be repaid could become a negotiating point. "Most of the time, creditors don't like to see money go out to the equity before you've paid off the creditor," said Stephen G. Moyer, director of research at Imperial Capital LLC.

The current noteholders could negotiate a higher interest rate on the new notes or request equity stakes to make the deal more equitable, he said.

The deal is subject to approval by the bank lenders and the public debtholders.

On Tuesday, Finova said that it had received a commitment from Berkadia LLC - a joint venture between Leucadia National and Berkshire Hathaway - for the $6 billion loan, providing Finova and its subsidiaries file for protection from creditors under Chapter 11 of the federal Bankruptcy Code. The loan would be made to Finova Capital.

Finova did not make a $50 million principal payment due Tuesday on its 5.98% notes due 2001. In the restructuring, the company instituted a moratorium on repayment of principal on bank and bond debt.

The moratorium is meant to "help assure that all creditors are treated equitably in the debt restructuring process," Finova said.

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