Muzak reorganization plan cuts debt in half
SAN FRANCISCO — Muzak Holdings said Thursday it has filed a bankruptcy reorganization plan that has the support of its biggest lenders and would cut its debt by more than half.
The Fort Mill, S.C., company — which is synonymous with elevator music — now also creates programming for retail stores and for on-hold phone systems.
It will seek court approval to begin soliciting votes for its plan at a hearing on Oct. 27. At that hearing, a judge will decide whether to approve its disclosure statement, a plain English explanation of its full plan.
If the judge approves the statement, Muzak can begin polling creditors for approval of the plan to emerge from court protection.
The proposed plan has the support of the company’s biggest lender, Greenwich, Conn.-based hedge fund Silver Point Capital Advisors LP. The committee of unsecured creditors also supports it.
The plan calls for Silver Point and other bank lenders either to be paid in full, using money from a bankruptcy exit loan, or to receive a prorated share of a new term loan. They might also get some combination of cash and notes.
Meanwhile, top unsecured creditors would receive 100 percent of the stock in the reorganized company, once it exits bankruptcy. Lower-ranked unsecured creditors would get warrants to buy an equity stake. And general unsecured creditors, like vendors, would get paid in full in cash, the company said.
Muzak filed for Chapter 11 protection in Delaware in February, burdened by heavy debt. It said then that it needed to refinance loans.
Its reorganization plan includes the reduction of its debt by more than half to $230 million.
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