Private equity-backed AGY Holding Corp. has entered into a restructuring and support agreement with some of its bondholders to recapitalize the company.
About 92 percent of the bondholders holding $172 million in 11 percent senior second lien notes due 2014 have agreed to the restructuring agreement.
Aiken, S.C.-based AGY produces fiberglass yarns and fiberglass reinforcements for the aerospace and defense, electronics, construction and industrial markets. The products are used for helicopter blades, aircraft interiors, circuit boards, baseball bats and other things.
AGY also entered into a short-term amendment to its lease with DB Energy Trading LLC, which extends the term of its metals facility through July 15. DB has agreed to forbear from exercising its default rights on the property from AGY’s failure to make interest payments on loans and notes. AGY said in filings with the U.S. Securities and Exchange Commission that it expects to amend and extend the lease again.
UBS AG, Stamford Branch, and UBS Securities LLC, have also agreed to forbear from their rights if AGY defaults by not making an interest payment due under the notes.
Of the existing notes, 50 percent of them will be exchange for shares of convertible participating preferred stock in KAGY Holdings Co. Inc., and 50 percent will be exchange for new 11 percent senior second lien notes due Dec. 15, 2016. Interest would also be split – 50 percent would be paid in cash and the other half would be paid in convertible participating preferred stock of KAGY. KAGY is AGY’s parent company.
For the deal to go through, holders of 97 percent of the principal amount of the notes need to participate.
Then, AGY would enter into a new term loan agreement with one or more of the majority bondholders for $15 million.
The support agreement will terminate on July 15 if the deal hasn’t gone through. The company has spent about $4.7 million on restructuring since January 2012, SEC filings show.
AGY is backed by private equity firm Kohlberg & Co., which makes middle market investments between $50 million and $200 million. Kohlber g invested in AGY in 2006.
Ropes & Gray LLP partners John Pollack, Adam Harris, Ronald Risdon and Kurt Rosell represented AGY and Kohlberg.