Marcade Group Inc. said it filed Chapter 11 Friday, less than three months after escaping a bid by a small group of its bondholders to force it into bankruptcy.
The company's reorganization plans contemplate a hefty investment by some Apollo Advisors L.P.-related entities.
"Marcade intends to reorganize pursuant to a plan which has already received the support of a majority of its various creditor constituencies," the company said in a release issued Friday. "In addition, it has received the support of the holders of a majority of its preferred and common equity."
Marcade's senior secured lender, Heller Financial Inc., has not endorsed the plan, although it contemplates paying Heller in full, the release says.
Heller officials were not immediately available for comment.
Asked why Marcade filed voluntary Chapter 11 after fighting off bondholders' earlier attempt, Charles S. Ramat, Marcade's chairman and chief executive officer, said he preferred to let the company's release speak for itself.
The Chapter 11 filing excludes Marcade's operating subsidiaries. They will continue to bear no responsibility for Marcade's debt and operate normally. Marcade said it plans to file a definitive reorganization plan shortly. The company's petition includes Marlene Industries Corp., an inactive Marcade subsidiary.
In return for their investment, some Apollo Advisors-managed entities would get about half of Marcade's common stock on a fully diluted basis upon the plan's consummation. Apollo-related entities now own about 77% of Marcade's senior subordinated debt, the release says.
Key elements of Marcade's reorganization plan include redeeming Marcade's senior subordinated debt for cash at a discount, giving holders of Marcade's junior non-convertible debt a discounted cash payment 53 weeks after the plan's consummation, and allowing holders of the company's junior convertible debt to convert it into common stock in accordance with the terms of that debt. The plan also calls for Marcade's common stockholders to keep the balance of Marcade's stock and for Marcade to keep all of its existing businesses.
In August, Marcade Chief Financial Officer Paul Spector announced that Judge James L. Garrity in U.S. Bankruptcy Court for New York's Southern District had dismissed an involuntary Chapter 11 petition put forth by a small percentage of the company's bondholders.
Holders representing about 3% of Marcade's outstanding $23 million face amount of subordinated debt filed the petition on July 10, Spector said. The company had originally issued $32.5 million of subordinated debt, with one issue at $20 million and the other at $12.5 million, he said.
In other news yesterday, TKR Cable I Inc. issued $350 million of 10.50% senior debentures due 2007 at par. Callable after seven years at 105.25, the debentures were rated Ba2 by Moody's Investors Service and BBB-minus by Standard & Poor's Corp. Merrill Lynch & Co. managed the offering.
TKR Cable had originally planned to sell $350 million of senior notes due 1999 and and $400 million of senior debentures due 2012. The offering was restructured, however, because of "the events of Oct. 5 when the equity market really took a dive," said Steve Smith, director of investor relations at Denver-based Tele-Communications Inc.
"So it's really not a credit issue; it's a market issue," Smith said. Prior to Oct. 5, some 70 institutions were "very upbeat" about the offering, he added.
TKR Cable is a subsidiary of a partnership in which Tele-Communications owns 70%, he said.
In other news, bankrupt R.H. Macy & Co. will present its five-year business plan to its creditors on Thursday, a day earlier than expected, according to a company spokesman.
A bankruptcy judge had set Friday as Macy's deadline for putting the plan before creditors, the spokesman said.
The plan will be presented to creditors in a private meeting, followed by a noon press conference, he said.
Macy's co-chairmen and chief executive officers Mark S. Handler and Myron E. Ullman will conduct the press conference at the Hotel Inter-Continental in Manhattan, the spokesman said.
"No one knows what to expect," one analyst said, adding that he noticed no change in Macy's bonds immediately following the news.
Elsewhere, Ford Motor Credit Co. announced plans Friday to redeem its 8 3/8% debentures and its 8 1/2% desubordinated debentures on Dec. 1.
Both series mature in 2002 and will be redeemed at 101% of their principal amount.
The Bank of New York is the paying agent for the 8 3/8% debentures, while Chemical Ban is the agent for 8 1/2% subordinated debentures.
Interest on both issues will cease to accrue on their redemption dates.
In secondary trading, investment-grade bonds lost 1/4 point on "general lethargy" in the government market, one trader said. High-yield bonds gained 1/2 point, traders said. Cable issues in particular got a lift from TKR's deal, which was well bid for. One trader reported an increase in interest from mutual funds.