Conversion bus builder Motor Coach Industries (MCI) recently announced that it has reached agreement with its secured lenders regarding a restructuring that will “substantially reduce the company’s debt,” according the Schaumber, Ill.-based firm.
The restructuring will be implemented through a pre-negotiated chapter 11 filing that will reduce the MCI’s total debts by approximately $420 million and reducing ongoing interest expense by approximately $54 million annually. The restructuring plan will be funded by Franklin Mutual Advisers LLC and certain of its affiliates, a global investment management firm.
Key elements of the proposed restructuring include:
• Repayment in full of the company’s approximately $160 million second lien secured debt.
• Conversion of approximately $200 million of third lien secured debt into new equity of the reorganized company.
• Support of payments to MCI’s critical vendors for pre-petition purchases of goods and services.
MCI said the pre-negotiated chapter 11 filing is expected to have no impact on the its production facilities, delivery schedules, after-sale parts availability or service centers. The filing pertains only to MCI’s operations in the U.S. and does not include its Canadian interests.
“We made the strategic decision to significantly reduce our debt, strengthen our balance sheet and access new capital through a voluntary filing under chapter 11 so that we can build on our leadership position in the industry,” said Tom Sorrells, president and CEO. “We intend to work with our current vendors and to continue operations without interruption to our customers.