Apollo Global Management is one step closer to taking over bankrupt plastic packaging manufacturer Pliant after a judge approved sending its reorganisation plan to creditors for a vote.
The judge’s approval caps a six-month battle between Apollo and Pliant’s management over how to reorganise the company since Pliant stumbled into bankruptcy in February because of the escalating price of raw materials and high energy prices. The company had been in bankruptcy once before, in 2006, and was reorganised by management.
Apollo is a holder of a significant amount of Pliant’s junior debt. While Pliant management’s bankruptcy plan gave the bulk of recovery to the company’s senior lenders – owed about $394 million – and left junior debt holders with only warrants to buy new stock, Apollo’s plan gives recovery to senior and junior debt holders, as well as general unsecured creditors.
Apollo submitted an earlier reorganisation plan, but has revised it slightly to add some sweeteners for senior lenders.
Under Apollo’s new plan, senior lenders will receive a cash payment of $100 million and get $250 million of new senior secured notes in the reorganised company. This is up slightly from Apollo’s original plan, which would have given senior lenders $89 million in cash and $236 million in new debt.
A confirmation hearing for the bankruptcy plan is set for 6 October, after creditors have had a chance to vote on the plan.
Apollo has an existing plastics platform with portfolio company Berry Plastics, which it bought for $2.25 billion in 2006 along with mid-market firm Graham Partners.