EXHIBIT 2.1
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION AT DAYTON
In Re: : Chapter 11
:
AMCAST INDUSTRIAL CORPORATION, et. al. : Case No. 04-40504
: (Jointly Administered)
ebtors and Debtors in Possession. :
: Judge Walter
DISCLOSURE STATEMENT WITH RESPECT TO FIRST AMENDED JOINT PLAN
OF REORGANIZATION UNDER CHAPTER 11, TITLE 11,
UNITED STATES CODE OF AMCAST INDUSTRIAL CORPORATION AND
ITS AFFILIATED DEBTOR ENTITIES
Alan R. Lepene, Esq.
Jeremy M. Campana, Esq.
THOMPSON HINE LLP
3900 Key Center
127 Public Square
Cleveland, OH 44114-1291
Telephone: 216.566.5500
Facsimile: 216.566.5800
alan.lepene@thompsonhine.com
jeremy.campana@thompsonhine.com
-and-
Lawrence T. Burick, Esq.
Jennifer L. Maffett, Esq.
THOMPSON HINE LLP
2000 Courthouse Plaza N.E.
10 West Second Street
Dayton, Ohio 45402
Telephone: 937.443.6600
Facsimile: 937.443.6635
larry.burick@thompsonhine.com
jennifer.maffett@ thompsonhine.com
Attorneys for Debtors and Debtors-in-Possession
DISCLAIMER
THE INFORMATION CONTAINED IN THIS DISCLOSURE STATEMENT IS INCLUDED HEREIN
FOR PURPOSES OF SOLICITING ACCEPTANCES OF THE JOINT PLAN OF REORGANIZATION UNDER
CHAPTER 11, TITLE 11, UNITED STATES CODE OF AMCAST INDUSTRIAL CORPORATION AND
ITS AFFILIATED DEBTOR ENTITIES (THE "PLAN"). THE INFORMATION MAY NOT BE RELIED
UPON FOR ANY PURPOSE OTHER THAN TO DETERMINE HOW TO VOTE ON THE PLAN. NO PERSON
MAY GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS, OTHER THAN THE INFORMATION
AND REPRESENTATIONS CONTAINED IN THIS DISCLOSURE STATEMENT, REGARDING THE PLAN
OR THE SOLICITATION OF ACCEPTANCES OF THE PLAN.
ALL CREDITORS ARE ADVISED AND ENCOURAGED TO READ THIS DISCLOSURE STATEMENT
AND THE PLAN IN THEIR ENTIRETY BEFORE VOTING TO ACCEPT OR REJECT THE PLAN. PLAN
SUMMARIES AND STATEMENTS MADE IN THIS DISCLOSURE STATEMENT ARE QUALIFIED IN
THEIR ENTIRETY BY REFERENCE TO THE PLAN AND THE EXHIBITS AND SCHEDULES ANNEXED
TO THE PLAN. THE STATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT ARE MADE ONLY
AS OF THE DATE HEREOF, AND THERE CAN BE NO ASSURANCE THAT THE STATEMENTS
CONTAINED HEREIN SHALL BE CORRECT AT ANY TIME AFTER THE DATE HEREOF.
THIS DISCLOSURE STATEMENT HAS BEEN PREPARED IN ACCORDANCE WITH SECTION
1125 OF THE UNITED STATES BANKRUPTCY CODE AND RULE 3016 OF THE FEDERAL RULES OF
BANKRUPTCY PROCEDURE AND NOT NECESSARILY IN ACCORDANCE WITH FEDERAL OR STATE
SECURITIES LAWS OR OTHER NON-BANKRUPTCY LAW. THIS DISCLOSURE STATEMENT HAS BEEN
NEITHER APPROVED NOR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION (THE
"SEC"), NOR HAS THE SEC PASSED UPON THE ACCURACY OR ADEQUACY OF THE STATEMENTS
CONTAINED HEREIN. PERSONS OR ENTITIES TRADING IN OR OTHERWISE PURCHASING,
SELLING OR TRANSFERRING SECURITIES OR CLAIMS OF AMCAST INDUSTRIAL CORPORATION IN
THESE CASES SHOULD EVALUATE THIS DISCLOSURE STATEMENT AND THE PLAN IN LIGHT OF
THE PURPOSE FOR WHICH THEY WERE PREPARED.
AS TO CONTESTED MATTERS, ADVERSARY PROCEEDINGS AND OTHER ACTIONS OR
THREATENED ACTIONS, THIS DISCLOSURE STATEMENT SHALL NOT CONSTITUTE OR BE
CONSTRUED AS AN ADMISSION OF ANY FACT OR LIABILITY, STIPULATION OR WAIVER, BUT
RATHER AS A STATEMENT MADE IN SETTLEMENT NEGOTIATIONS. THIS DISCLOSURE STATEMENT
SHALL NOT BE ADMISSIBLE IN ANY NON-BANKRUPTCY PROCEEDING NOR SHALL IT BE
CONSTRUED TO BE CONCLUSIVE ADVICE ON THE TAX, SECURITIES OR OTHER LEGAL EFFECTS
OF THE PLAN AS TO HOLDERS OF CLAIMS AGAINST OR EQUITY INTERESTS IN AMCAST
INDUSTRIAL CORPORATION AND ITS AFFILIATED DEBTOR ENTITIES.
TABLE OF CONTENTS
ARTICLE I INTRODUCTION.............................................................................. 1
ARTICLE II OVERVIEW OF THE PLAN..................................................................... 4
A. General Structure of the Plan......................................................... 4
B. Summary of Treatment of Claims and Interests under the Plan........................... 5
ARTICLE III PLAN VOTING INSTRUCTIONS AND PROCEDURES................................................. 14
A. Notice to Holders of Claims and Interests............................................. 14
B. Voting Rights......................................................................... 14
C. Solicitation Materials................................................................ 15
D. Voting Procedures, Ballots and Voting Deadline........................................ 15
E. Special Notice Concerning Voting...................................................... 16
F. Confirmation Hearing and Deadline for Objections to Confirmation...................... 18
ARTICLE IV GENERAL INFORMATION CONCERNING THE DEBTORS............................................... 18
A. Corporate Information Concerning Debtors.............................................. 18
B. Overview of Business Operations....................................................... 21
C. Summary of Current Operations......................................................... 22
D. Management and Employees.............................................................. 24
E. Prepetition Capital Structure of Amcast............................................... 28
F. Summary of Assets..................................................................... 30
G. Historical Financial Information...................................................... 30
H. Events Leading to Commencement of the Chapter 11 Case................................. 30
ARTICLE V CHAPTER 11 CASE........................................................................... 32
A. Continuation of Business; Stay of Litigation.......................................... 32
B. First Day Orders...................................................................... 32
C. Retention of Professionals............................................................ 33
D. Official Appointment of Creditors Committee........................................... 33
E. Authorization to Use Cash Collateral.................................................. 34
F. Postpetition and Postconfirmation Funding............................................. 34
G. Other Material Matters to be Addressed during the Chapter 11 Case..................... 37
H. Plan Process.......................................................................... 39
ARTICLE VI SUMMARY OF THE PLAN OF REORGANIZATION.................................................... 40
A. Overall Structure of the Plan......................................................... 40
B. Joint Treatment....................................................................... 41
C. Classification and Treatment of Claims and Interests.................................. 41
D. Reservation of Rights Regarding Claims................................................ 52
i
E. Allowed Claims, Distribution Rights and Objections to Claims.......................... 52
F. Disposition of Executory Contracts and Unexpired Leases............................... 55
G. Revesting of Assets; Release of Liens; Effective Date Restructurings.................. 58
H. Post-consummation Corporate Structure, Management and Operation....................... 58
I. Confirmation and/or Consummation...................................................... 61
J. Releases, Discharge, Injunctions, Exculpation and Indemnification..................... 63
K. Preservation of Rights of Action...................................................... 67
L. Retention of Jurisdiction............................................................. 68
M. Amendment, Alteration, Revocation and Modification of Plan............................ 70
N. Plan Implementing Documents........................................................... 70
ARTICLE VII CERTAIN RISK FACTORS TO BE CONSIDERED................................................... 71
A. General Considerations................................................................ 71
B. Certain Bankruptcy Considerations..................................................... 71
C. Claims Estimations.................................................................... 72
D. Conditions Precedent to Consummation.................................................. 72
E. Inherent Uncertainty of Financial Projections......................................... 72
F. Certain Risk Factors Relating to Securities to be Issued Under the Plan............... 73
G. Competition........................................................................... 74
H. Raw Materials / Production............................................................ 74
I. Market Conditions..................................................................... 74
J. Environmental......................................................................... 74
K. Reliance on Key Personnel............................................................. 75
L. Leverage.............................................................................. 76
M. Litigation............................................................................ 77
N. Adverse Publicity..................................................................... 77
O. Certain Tax Considerations............................................................ 77
ARTICLE VIII APPLICABILITY OF FEDERAL AND OTHER SECURITIES LAWS..................................... 77
A. Offer and Sale of New Securities Pursuant to the Plan: Bankruptcy Code
Exemption From Registration Requirements.............................................. 77
B. Subsequent Transfers of New Amcast Common Stock....................................... 78
ARTICLE IX CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN...................................... 79
A. Certain U.S. Federal Income Tax Consequences of the Plan.............................. 79
ARTICLE X FEASIBILITY OF THE PLAN AND BEST INTERESTS OF CREDITORS................................... 86
A. Feasibility of the Plan............................................................... 86
B. Acceptance of the Plan................................................................ 87
ii
C. Best Interests Test................................................................... 87
D. Liquidation Analysis.................................................................. 88
E. Valuation of the Reorganized Debtors.................................................. 88
F. Financial Projections................................................................. 90
G. Application of the "Best Interests" of Creditors Test to the Liquidation
Analysis and the Valuation............................................................ 94
H. Confirmation without Acceptance of All Impaired Classes: the "Cramdown"
Alternative........................................................................... 94
ARTICLE XI ALTERNATIVES TO CONFIRMATION AND CONSUMMATION OF THE PLAN................................ 95
A. Alternative Plan(s) of Reorganization................................................. 95
B. Liquidation under Chapter 7 or Chapter 11............................................. 96
ARTICLE XII THE SOLICITATION; VOTING PROCEDURES..................................................... 96
A. Parties in Interest Entitled to Vote.................................................. 96
B. Classes Entitled to Vote to Accept or Reject the Plan................................. 97
C. Solicitation Order.................................................................... 97
D. Waivers of Defects, Irregularities, Etc............................................... 97
E. Withdrawal of Ballots; Revocation..................................................... 98
F. Voting Rights of Disputed Claimants................................................... 98
G. Further Information; Additional Copies................................................ 98
iii
TABLE OF APPENDICES
Appendix A Joint Plan of Reorganization under Chapter 11, Title 11, United
States Code of Amcast Industrial Corporation and its Affiliated
Debtor Entities
Appendix B Pro Forma Financial Projections
Appendix C Pre-Petition Corporate Structure Chart
Appendix D Historical Financial Information
Appendix E Liquidation Analysis
Appendix F Litigation Rights
iv
DISCLOSURE STATEMENT WITH RESPECT TO FIRST AMENDED JOINT PLAN
OF REORGANIZATION UNDER CHAPTER 11, TITLE 11, UNITED STATES CODE
OF AMCAST INDUSTRIAL CORPORATION AND
ITS AFFILIATED DEBTOR ENTITIES
ARTICLE I
INTRODUCTION
Amcast Industrial Corporation ("Amcast") together with its affiliated
debtor entities, as debtors and debtors in possession (collectively with Amcast,
the "Debtors")(1) hereby submit this disclosure statement (the "Disclosure
Statement") pursuant to Section 1125 of Title 11 of the United States Code (the
"Bankruptcy Code"), for use in the solicitation of votes on their First Amended
Joint Plan of Reorganization under Chapter 11, Title 11, United States Code
dated December 16, 2004 (the "Plan"). A copy of the Plan is attached as Appendix
A to this Disclosure Statement. All capitalized terms used in this Disclosure
Statement but not otherwise defined herein have the meanings ascribed to such
terms in the Plan. In addition, all references in this Disclosure Statement to
monetary figures refer to United States currency, unless otherwise expressly
provided.
This Disclosure Statement sets forth certain information regarding the
Debtors' prepetition operating and financial history, their reasons for seeking
protection and reorganization under Chapter 11, significant events that have
occurred during the Chapter 11 case and the anticipated organization, operations
and financing of the Debtors upon successful emergence from Chapter 11. This
Disclosure Statement also describes certain terms and provisions of the Plan,
certain effects of confirmation of the Plan, certain risk factors associated
with the Plan and the securities to be issued under the Plan, and the manner in
which distributions will be made under the Plan. In addition, this Disclosure
Statement discusses the confirmation process and the voting procedures that
holders of Claims entitled to vote under the Plan must follow for their votes to
be counted.
By order dated , 2005, the Bankruptcy Court has approved this Disclosure
Statement as containing "adequate information" in accordance with Section 1125
of the Bankruptcy Code, to enable a hypothetical, reasonable investor typical of
holders of Claims against, or Interests in, the Debtors to make an informed
judgment as to whether to accept or reject the Plan; and has authorized its use
in connection with the solicitation of votes with respect to the Plan. APPROVAL
OF THIS DISCLOSURE STATEMENT DOES NOT, HOWEVER, CONSTITUTE A DETERMINATION BY
THE BANKRUPTCY COURT AS TO THE FAIRNESS OR MERITS OF THE PLAN. No solicitation
of votes may be made except pursuant to this Disclosure Statement or the summary
of this Disclosure Statement, if any, and Section 1125 of the Bankruptcy Code.
In voting on the Plan, holders of Claims entitled to vote should not rely on any
information relating to the Debtors and their businesses,
- ------------------------
(1) The Debtors are: Amcast Industrial Corporation, Amcast Automotive of
Indiana, Inc., Speedline North America, Inc., Amcast Casting Technologies, Inc.,
Izumi, Inc., Casting Technology Company, Amcast Automotive, Inc., Amcast
Plumbing, Inc. f/k/a Elkhart Products Corporation, LBC Group Corp., Lee Brass
Company, Amcast Industrial Financial Services, Inc., Amcast Investment Services
Corporation, Amcast Aviation Corporation, Amcast Precision Products, Inc., Flagg
Brass Industrial, L.L.C. and AS International, Inc.
other than that contained in this Disclosure Statement or the summary of this
Disclosure Statement, if any, the Plan and all exhibits hereto and thereto.
Pursuant to the provisions of the Bankruptcy Code, only classes of claims
or interests that are (i) "impaired" by a plan of reorganization and (ii)
entitled to receive a distribution under such plan are entitled to vote on the
plan. In the Debtors' cases, only Claims in Classes 2, 3, 4 and 5 are impaired
by and entitled to receive a distribution under the Plan, and only the holders
of Claims in those Classes are entitled to vote to accept or reject the Plan.
The Claims in Class 1 are unimpaired by the Plan, and the holders thereof are
conclusively presumed to have accepted the Plan. Claims or Interests in Classes
6, 7, and 8 which receive nothing under the Plan, are deemed to have rejected
the Plan and the holders of Claims or Interests in each of such Classes are not
entitled to vote.
FOR A DESCRIPTION OF THE PLAN AND VARIOUS RISKS AND OTHER FACTORS
PERTAINING TO THE PLAN, PLEASE SEE ARTICLE VI OF THIS DISCLOSURE STATEMENT,
ENTITLED "SUMMARY OF THE PLAN OF REORGANIZATION," AND ARTICLE VII OF THIS
DISCLOSURE STATEMENT, ENTITLED "CERTAIN RISK FACTORS TO BE CONSIDERED."
THIS DISCLOSURE STATEMENT CONTAINS SUMMARIES OF CERTAIN PROVISIONS OF THE
PLAN, CERTAIN STATUTORY PROVISIONS, CERTAIN DOCUMENTS RELATING TO THE PLAN,
CERTAIN EVENTS THAT HAVE OCCURRED IN THE CHAPTER 11 CASE AND CERTAIN FINANCIAL
INFORMATION. ALTHOUGH THE DEBTORS BELIEVE THAT THE SUMMARIES OF THE PLAN AND
RELATED DOCUMENT SUMMARIES ARE FAIR AND ACCURATE AS OF THE DATE HEREOF, SUCH
SUMMARIES ARE QUALIFIED TO THE EXTENT THAT THEY DO NOT SET FORTH THE ENTIRE TEXT
OF SUCH DOCUMENTS OR STATUTORY PROVISIONS AND TO THE EXTENT THEY MAY CHANGE AS
PERMITTED BY THE PLAN AND APPLICABLE LAW. FACTUAL INFORMATION CONTAINED IN THIS
DISCLOSURE STATEMENT HAS BEEN PROVIDED BY THE DEBTORS' MANAGEMENT, EXCEPT WHERE
OTHERWISE SPECIFICALLY NOTED. THE DEBTORS DO NOT WARRANT OR REPRESENT THAT THE
INFORMATION CONTAINED HEREIN, INCLUDING THE FINANCIAL INFORMATION, IS WITHOUT
ANY MATERIAL INACCURACY OR OMISSION.
NOTHING CONTAINED HEREIN SHALL BE DEEMED TO CONSTITUTE AN ADMISSION OF ANY
FACT OR LIABILITY BY ANY PARTY, BE ADMISSIBLE IN ANY NON-BANKRUPTCY PROCEEDING
INVOLVING THE DEBTORS OR ANY OTHER PARTY, OR BE DEEMED CONCLUSIVE ADVICE ON THE
TAX OR OTHER LEGAL EFFECTS OF THE REORGANIZATION AS TO HOLDERS OF ALLOWED CLAIMS
OR INTERESTS. YOU SHOULD CONSULT YOUR PERSONAL COUNSEL OR TAX ADVISOR ON ANY
QUESTIONS OR CONCERNS RESPECTING TAX, SECURITIES, OR OTHER LEGAL CONSEQUENCES OF
THE PLAN.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS: All statements
other than statements of historical fact included in this Disclosure Statement
are forward-looking statements, including, without limitation, statements
2
relating to the following: financial projections; the scope, timing and
completion of the current restructuring, the Plan and bank financing; debt and
equity market conditions; the cyclicality of Amcast's industry; current and
future industry conditions; the potential effects of such matters on Amcast's
business strategy, results of operations or financial position; the adequacy of
Amcast's liquidity; and the market sensitivity of Amcast's financial
instruments. These forward-looking statements are based upon current information
and expectations. Estimates, forecasts and other statements contained in or
implied by the forward-looking statements speak only as of the date on which
they are made, are not guarantees of future performance and involve certain
risks, uncertainties and assumptions that are difficult to evaluate and predict.
Actual results may differ materially from those contemplated by such
forward-looking statements. Certain important factors that could cause actual
results to differ materially from Amcast's expectations or what is expressed,
implied or forecasted by or in the forward-looking statements include:
developments in the Chapter 11 Case; motions filed or actions taken in
connection with the bankruptcy proceedings; adverse developments in the timing
or results of Amcast's business plan (including the time line to emerge from
Chapter 11); the timing and extent of changes in commodity prices and global
economic conditions; a decline in demand for Amcast's products; the loss of
sales revenue due to competitive products and pricing pressures; Amcast's
inability to maintain operating costs at competitive levels; Amcast 's inability
to obtain raw materials at acceptable prices, in a timely manner and on
acceptable terms; federal and state regulatory developments; any increase in
Amcast's financial leverage; Amcast's ability to attract or retain high quality
employees; and operating hazards attendant to the industry. Additional factors
that could cause actual results to differ materially from what is expressed,
implied or forecasted by or in the forward-looking statements are stated herein
in cautionary statements made in conjunction with the forward-looking statements
or are included elsewhere in this Disclosure Statement.
Except with respect to the pro forma financial projections set forth in
Appendix B annexed hereto (the "Projections") and except as otherwise
specifically and expressly stated herein, this Disclosure Statement does not
reflect any events that may occur subsequent to the date hereof and that may
have a material impact on the information contained in this Disclosure
Statement. The Debtors do not undertake any obligation to, and do not intend to,
update the Projections; thus, the Projections will not reflect the impact of any
subsequent events not already accounted for in the assumptions underlying the
Projections. Further, the Debtors do not anticipate that any amendments or
supplements to this Disclosure Statement will be distributed to reflect such
occurrences. Accordingly, the delivery of this Disclosure Statement will not
under any circumstance imply that the information herein is correct or complete
as of any time subsequent to the date hereof. Moreover, the Projections are
based on assumptions that, although believed to be reasonable by the Debtors,
may differ from actual results.
THE DEBTORS BELIEVE THAT THE PLAN WILL ENABLE THE DEBTORS TO SUCCESSFULLY
REORGANIZE AND ACCOMPLISH THE OBJECTIVES OF CHAPTER 11 AND THAT ACCEPTANCE OF
THE PLAN IS IN THE BEST INTERESTS OF THE DEBTORS AND THE HOLDERS OF CLAIMS IN
CLASSES 2, 3, 4 AND 5. THE DEBTORS URGE SUCH HOLDERS TO VOTE TO ACCEPT THE PLAN.
3
ARTICLE II
OVERVIEW OF THE PLAN
The following is a brief overview of the material provisions of the Plan
and is qualified in its entirety by reference to the full text of the Plan. For
a more detailed description of the terms and provisions of the Plan, see Article
VI of this Disclosure Statement, entitled "Summary of the Plan of
Reorganization."
The Plan provides for the classification and treatment of Claims against
and Interests in the Debtors, based upon a joint plan structure. The Plan
designates seven (7) Classes of Claims and one (1) Class of Interests. These
Classes take into account the differing nature and priority under the Bankruptcy
Code of the various Claims and Interests.
The Debtors believe that the Plan presents the best means currently
available for their emergence from Chapter 11.
A. General Structure of the Plan. The Plan is structured as a joint plan,
pursuant to which each individual Claim against any of the Estates shall be
deemed to be a single Claim against all Estates, any Proof of Claim filed
against any of the Debtors shall be deemed to be a single Claim filed against
all Estates, and all duplicate Proofs of Claim for the same Claim filed against
all Debtors shall be expunged. Claims are treated generally in accordance with
the priorities established under the Bankruptcy Code, although special treatment
is provided to certain trade creditors who are deemed by the Debtors to be
crucial to the Debtors' post-confirmation business operations and who agree to
extend trade credit to the Debtors post-confirmation on acceptable terms.
The following is an overview of certain material terms of the Plan:
- The Debtors will be reorganized pursuant to the Plan and will
continue in operation, achieving the objectives of Chapter 11 for
the benefit of their creditors, customers, suppliers, employees and
communities.
- Holders of Administrative Claims, including superpriority claims
incurred in connection with debtor in possession financing provided
to the Debtors under that certain Amcast Debtor in Possession Credit
Agreement dated December 15, 2004, as such facility may be amended,
supplemented, or otherwise modified (the "DIP Facility"), Priority
Tax Claims and Other Priority Claims will be paid in full as
required by the Bankruptcy Code, unless otherwise agreed by the
holders of such Claims.
- Allowed Secured Claims ("Prepetition Secured Lender Claims") held by
the Debtors' senior secured lenders (the "Prepetition Secured
Lenders") under the Prepetition Transaction Documents (defined
below), will receive in full and complete satisfaction of their
Secured Claims:
4
(i) their pro rata share of Term Note A in an aggregate
principal amount of $42 million, minus the funded amount of the DIP
Facility on the Effective Date, with the payment and lien
priorities, terms and conditions set forth in the Term Note A
Agreement;
(ii) their pro rata share of Term Note B, in an aggregate
principal amount of $27 million, with the payment and lien
priorities, terms and conditions set forth in the Term Note B
Agreement; and
(iii) their pro rata share of 100% of the New Amcast Common
Stock issued as of the Effective Date (as Amcast Interests will be
cancelled pursuant to Section 4.4 of the Plan as set forth below).
- Key Continuing Vendor Claims, which are Claims of those Persons that
the Debtors designated as Critical Vendors pursuant to the December
28, 2004 order authorizing the Debtors to provisionally pay
prepetition claims of certain Critical Vendors, as subsequently
modified by the March 25, 2005 agreed order (the "Critical Vendor
Order"), will be Allowed in the amount set forth and paid in
accordance with the terms of the trade agreement (the "Trade
Agreement") executed between the Debtors and the Critical Vendor in
accordance with the terms of the Critical Vendor Order.
Payments scheduled to be made by the Debtors pursuant to the Trade
Agreement and Critical Vendor Order shall continue to be made by the
Reorganized Debtors following the Effective Date. Any other
unsecured Claim that is, or otherwise could have been, asserted by
the holder of such Key Continuing Vendor Claim will be disallowed.
- Holders of allowed General Unsecured Claims, other than Key
Continuing Vendors, shall receive a lump sum cash payment in an
amount equal to their pro rata share of the Unsecured Claims
Reserve. See Article VI.C.2(g).
- Amcast Interests will be cancelled pursuant to Section 4.4 of the
Plan.
- The Reorganized Debtors will obtain secured financing in a principal
amount of not less than $89 million to refinance the DIP Facility,
pay administrative and priority claims, provide cash payments to
certain prepetition creditors, pay transaction costs, and fund
working capital and general corporate purposes of the Reorganized
Debtors following their emergence from Chapter 11.
B. Summary of Treatment of Claims and Interests under the Plan. The table
below summarizes the classification and treatment of the prepetition Claims and
Interests under the Plan. For certain Classes of Claims, estimated percentage
recoveries are also set forth below. Estimated percentage recoveries have been
calculated based upon a number of assumptions, including the amount of Allowed
Claims in each Class and the value ascribed to the New Amcast Common Stock to be
issued under the Plan.
5
For certain Classes of Claims, the actual amounts of Allowed Claims could
materially exceed or could be materially less than the estimated amounts shown
in the table that follows. The Debtors have not yet reviewed and fully analyzed
all Proofs of Claim filed in the Chapter 11 Case, and some claims are presently
disputed by the Debtors. Estimated Claim amounts for each Class set forth below
are based upon the Debtors' review of their books and records and of certain
Proofs of Claim, and include estimates of a number of Claims that are
contingent, disputed and/or unliquidated.
The reorganization value of the Reorganized Debtors is assumed for the
purposes of the Plan to be between approximately $67 million to $73 million,
with a midpoint value of $70 million. The implied equity value for the
Reorganized Debtors approximates $1 million. There will be a distribution of one
thousand shares of New Amcast Common Stock upon the Effective Date.
The foregoing valuations are based on numerous assumptions, including,
among other things, an assumption that the operating results projected for the
Reorganized Debtors will be achieved in all material respects, including revenue
growth and improvements in operating margins, earnings and cash flow. The
valuation assumptions also consider, among other matters, (a) market valuation
information concerning certain publicly traded securities of certain other
companies that are considered relevant, (b) certain general economic and
industry information considered relevant to the businesses of the Reorganized
Debtors and (c) such other investigations and analyses deemed necessary or
appropriate.
THE VALUATION ASSUMPTIONS ARE NOT A PREDICTION OR REFLECTION OF
POST-CONFIRMATION TRADING PRICES OF THE NEW AMCAST COMMON STOCK. SUCH SECURITIES
MAY TRADE AT SUBSTANTIALLY LOWER OR HIGHER PRICES BECAUSE OF A NUMBER OF
FACTORS, INCLUDING, BUT NOT LIMITED TO, THOSE DISCUSSED IN ARTICLE VII. THE
TRADING PRICES OF SECURITIES ISSUED UNDER A PLAN OF REORGANIZATION ARE SUBJECT
TO MANY UNFORESEEABLE CIRCUMSTANCES AND THEREFORE CANNOT BE PREDICTED.
Class Description Treatment Under Plan
- ----------------- --------------------
Administrative Claims An Administrative Claim is a Claim for payment of
an administrative expense of a kind specified in
Estimated Allowed Claims: Section 503(b) or 1114(e)(2) of the Bankruptcy Code
Approximately $17,443,000 and entitled to priority pursuant to Section 507(a)(1)
of the Bankruptcy Code, including, but not limited
to, (a) the actual, necessary costs and expenses
incurred after the Petition Date of preserving the
Estates and operating the businesses of the Debtors,
including wages, salaries, bonuses or commissions
for services rendered after the commencement of the
Chapter 11 Case, (b) Professional Fee Claims, (c)
all fees and charges assessed against the Estates
under 28 U.S.C. Sections 1930, (d) all Allowed Claims
for reclamation under Section 546(c)(2)(A) of the
Bankruptcy Code, (e) Cure payments for executory
contracts and
6
Class Description Treatment Under Plan
- ----------------- --------------------
unexpired leases that are assumed under Section 365
of the Bankruptcy Code, and (f) DIP Facility Claims.
Under the Plan, except as otherwise provided for
therein, and subject to the requirements of Sections
12.1 through 12.3 of the Plan, on, or as soon as
reasonably practicable after, the latest of (i) the
Effective Date, (ii) the date such Administrative
Claim becomes an Allowed Administrative Claim, or
(iii) the date such Administrative Claim becomes
payable pursuant to any agreement between a Debtor
and the holder of such Administrative Claim, the
holder of each such Allowed Administrative Claim
will receive in full satisfaction, settlement,
release, and discharge of and in exchange for such
Allowed Administrative Claim, (A) Cash equal to the
unpaid portion of such Allowed Administrative Claim
or (B) such different treatment as to which the
applicable Debtor and such holder will have agreed
upon in writing; provided, however, that Allowed
Administrative Claims with respect to liabilities
incurred by a Debtor in the ordinary course of
business during the Chapter 11 Case will be paid in
the ordinary course of business in accordance with
the terms and conditions of any agreements relating
thereto.
Under the Plan, each holder of an Allowed DIP
Facility Claim will receive, on the later of the
Effective Date or the date on which such DIP
Facility Claim becomes payable pursuant to any
agreement between the Debtors and the holder of such
DIP Facility Claim, in full satisfaction,
settlement, release and discharge of and in exchange
for such Allowed DIP Facility Claim, (i) Cash equal
to the full amount of such Allowed DIP Facility
Claim, or (ii) such different treatment as to which
the Debtors and such holder will have agreed upon in
writing.
Pursuant to the Plan, Adequate Protection Claims
held by Prepetition Secured Lenders shall be deemed
to have been satisfied in full by payments made
pursuant to the Final DIP Facility and Cash
Collateral Order. Any replacement or other Liens
created under such documents will terminate and will
have no further force and effect as of the Effective
Date, so long as all payments required to be made
under the
7
Class Description Treatment Under Plan
- ----------------- --------------------
Final DIP Facility and Cash Collateral Order have
been made.
Administrative Claims are not classified and are
treated as required by the Bankruptcy Code. The
holders of such Claims are not entitled to vote on
the Plan.
Estimated Percentage Recovery: 100%
Priority Tax Claims Priority Tax Claims are Claims of governmental units
for taxes that are entitled to priority pursuant to
Estimated Allowed Claims: Section 507(a)(8) of the Bankruptcy Code.
Approximately $792,194
Under the Plan, each holder of an Allowed Priority
Tax Claim will receive in full satisfaction,
settlement, release and discharge of and in exchange
for such Allowed Priority Tax Claim, (i) on, or as
soon as reasonably practicable after, the later of
the Effective Date or the date on which such Claim
becomes an Allowed Claim, Cash equal to the unpaid
portion of such Allowed Priority Tax Claim, (ii)
such different treatment as to which the applicable
Debtor and such holder will have agreed upon in
writing, or (iii) at the Reorganized Debtors' sole
discretion, deferred Cash payments having a value,
as of the Effective Date, equal to such Allowed
Priority Tax Claim, payable with interest at 6% over
a period not exceeding six (6) years after the date
of assessment of such Allowed Priority Tax Claim.
Priority Tax Claims are not classified and are
treated as required by the Bankruptcy Code. The
holders of such Claims are not entitled to vote on
the Plan.
Estimated Percentage Recovery: 100%
Class 1, Other Priority Claims Class 1 consists of all Other Priority Claims
against the Debtors, which are Claims entitled to
Estimated Allowed Claims: priority pursuant to Section 507(a) of the Bankruptcy Code,
Approximately $0 other than a Priority Tax Claim or an Administrative Claim.
The Plan provides that on, or as soon as reasonably
practicable after, the latest of (i) the Effective
Date, (ii) the date on which such Other Priority
Claim becomes an Allowed Other Priority Claim, or
(iii) the date on which such Other Priority Claim
becomes payable pursuant to any agreement between a
Debtor
8
Class Description Treatment Under Plan
- ----------------- --------------------
and the holder of such Other Priority Claim, each
holder of an Allowed Other Priority Claim will
receive, in full satisfaction, settlement, release
and discharge of and in exchange for such Allowed
Other Priority Claim, either (A) Cash equal to the
unpaid portion of such Allowed Other Priority Claim
or (B) such other different treatment as to which
the applicable Debtor and such holder will have
agreed upon in writing.
Other Priority Claims are Unimpaired. The holders of
such Claims are, therefore, not entitled to vote on
the Plan.
Estimated Percentage Recovery: 100%
Class 2, Prepetition Secured Lender Class 2 consists of Prepetition Secured Lender
Claims Claims, which are Secured Claims arising under the
Prepetition Transaction Documents (defined below)
Estimated Allowed Claims: as of the Petition Date.
Approximately $108,351,000 in
principal plus fees and Under the Plan, the holders of Prepetition
expenses permitted under Secured Lender Claims, in full satisfaction,
the Prepetition Loan settlement, release and discharge of and in
Transaction Documents and exchange for such Prepetition Secured Lender
such amount, if any, in unpaid Claims, will receive on the Distribution
accrued interest as may be Date, through the Prepetition Secured Lender
determined by the Bankruptcy Agent,
Court.
(i) their pro rata share of Term Note A in the
aggregate principal amount of $42 million, minus the
funded amount of the DIP Facility on the Effective
Date, with the payment and lien priorities, terms
and conditions set forth in the Term Note A
Agreement;
(ii) their pro rata share of Term Note B in the
aggregate principal amount of $27 million with the
payment and lien priorities, terms and conditions
set forth in the Term Note B Agreement; and
(iii) their pro rata share of 100% of the New
Amcast Common Stock issued as of the Effective Date
(as Amcast Interests will be cancelled pursuant to
Section 4.4 of the Plan).
Pursuant to the Plan, the Prepetition Secured
Lenders will receive the distributions provided for
Prepetition Secured Lender Claims in full
satisfaction,
9
Class Description Treatment Under Plan
- ----------------- --------------------
settlement, release and discharge of and in exchange
for all Secured Claims arising under the Prepetition
Transaction Documents.
Prepetition Secured Lender Claims are Impaired. The
holders of such Claims are entitled to vote on the
Plan.
Estimated Percentage Recovery: 65%
Class 3, Other Secured Claims Class 3 consists of Other Secured Claims, each of which
Estimated Allowed Claims: shall be placed in one or more subclasses hereunder,
which are Secured Claims arising prior to the Petition
Approximately $0 Date against any of the Debtors, other than a Prepetition
Secured Lender Claim.
(The actual amount of Allowed The Plan provides that on the Effective Date, at the
Claims for Class 3 could option of the Reorganized Debtors, either (A) the
materially exceed the legal, equitable, and contractual rights of each
estimated amount shown holder of an Allowed Other Secured Claim will be
herein). reinstated in accordance with the provisions of
section 1124(2) of the Bankruptcy Code, provided,
however, that any contractual right that does not
pertain to the payment when due of principal and
interest on the obligation on which such Claim is
based, including, but not limited to, financial
covenant ratios, negative pledge covenants,
covenants or restrictions on merger or
consolidation, covenants regarding corporate
existence, or covenants prohibiting certain
transactions or actions contemplated by the Plan or
conditioning such transactions or actions on certain
factors, will not be required to be reinstated in
order for a Claim to be considered reinstated; (B)
each holder of an Allowed Other Secured Claim shall
(I) retain the Liens securing such Allowed Other
Secured Claim and (II) receive deferred Cash
payments totaling at least the amount of such
Allowed Other Secured Claim, of a value, as of the
Effective Date, of at least the value of such
holder's interest in the Estate's interest in such
property; (C) the collateral securing such Allowed
Other Secured Claim shall be surrendered to the
holder of such Allowed Other Secured Claim; or (D)
each holder of an Allowed Other Secured Claim shall
be paid in full in Cash on the Effective Date.
Other Secured Claims are Impaired. The holders of
such Claims are, therefore, entitled to vote on the
10
Class Description Treatment Under Plan
- ----------------- --------------------
Plan.
Estimated Percentage Recovery: 100%
Subclass 3(i), Mechanic's Lien Subclass 3(i) consists of Secured Claims of certain
Secured Claims creditors who have filed and perfected mechanic's
liens that are not subject to avoidance in
Estimated Allowed Claims: accordance with the provisions of Section 546(b) of
the Bankruptcy Code. Under the Plan, the holders of
Approximately $0 Mechanic's Lien Secured Claims shall, at the option
of the Reorganized Debtors, receive the treatment
(The actual amount of Allowed specified in Section 4.3(b)(i)(A), (B), (C), (D) of
Claims for Subclass 3(i) the Plan as summarized above with respect to Class
could materially exceed 3, Other Secured Claims.
the estimated amount shown
herein). The Mechanic's Lien Secured Claims are Impaired. The
holders of such Claims are, therefore, entitled to
vote on the Plan.
Estimated Percentage Recovery: 100%
Class 4, Key Continuing Vendor Class 4 consists of Key Continuing Vendor Claims,
Claims which are Claims of those Persons that the Debtors
designated as Critical Vendors pursuant to the
Estimated Allowed Claims: Critical Vendor Order.
Approximately $4,900,000 Under the Plan, each Allowed Key Continuing Vendor
Claim will be Allowed in the amount set forth and
(The actual amount of Allowed paid in accordance with the terms of the Trade
Claims for Class 4 could Agreement executed between the Debtors and the
materially exceed or could be Critical Vendor in accordance with the terms of the
materially less than the Critical Vendor Order.
estimated amount shown herein).
Payments scheduled to be made by the Debtors
pursuant to the Trade Agreement and Critical Vendor
Order shall continue to be made by the Reorganized
Debtors following the Effective Date. Any other
unsecured Claim that is, or otherwise could have
been, asserted by the holder of such Key Continuing
Vendor Claim will be disallowed.
Key Continuing Vendor Claims are Impaired. The
holders of such Claims are, therefore, entitled to
vote on the Plan.
Estimated Percentage Recovery: 100%
11
Class Description Treatment Under Plan
- ----------------- --------------------
Class 5, General Unsecured Claims Class 5 consists of General Unsecured Claims
against the Debtors that are not Secured
Estimated Allowed Claims: Claims, Administrative Claims, Priority Tax
Claims, Other Priority Claims, Key Continuing
Approximately $43,700,000 Vendor Claims, Intercompany Claims, or
Non-Compensatory Damages Claims.
(The actual amount of Allowed Claims
for Class 5 could materially exceed The Plan provides that each holder of an
or could be materially less than the Allowed General Unsecured Claim will receive a
estimated amount shown herein). lump sum cash payment on the Distribution Date
in an amount equal to its pro rata share of
the Unsecured Claims Reserve. See Article
VII.C.2(f).
General Unsecured Claims are Impaired. The
holders of such Claims are, therefore,
entitled to vote on the Plan.
Estimated Percentage Recovery: 2%
Class 6, Intercompany Claims Class 6 consists of Intercompany Claims which
are Claims, arising prior to the Petition Date
Estimated Allowed Claims: against any of the Debtors by another Debtor
Approximately $0 or by a non-Debtor subsidiary or affiliate of
a Debtor, but only to the extent that such
(The actual amount of Allowed Claims affiliate is a direct or indirect subsidiary
for Class 6 could materially exceed of Amcast.
the estimated amount shown herein).
Under the Plan, subject to the Restructuring
Transactions as set forth in Section 6.3 of
the Plan, no holder of an Intercompany Claim
will receive or retain any property under the
Plan on account of such Claim and all
Intercompany Claims will be discharged as of
the Effective Date.
Holders of Intercompany Claims are Impaired
and will receive no distribution under the
Plan. The holders of such Claims are,
therefore, deemed to have rejected the Plan
and are not entitled to vote on the Plan.
Estimated Percentage Recovery: 0%
Class 7, Non-Compensatory Damages Class 7 consists of Non-Compensatory Damages
Claims Claims which are comprised of any Claim
against any of the Debtors, for any fine,
Estimated Allowed Claims: penalty, or forfeiture, or multiple,
Approximately $0 exemplary, or punitive damages, to the extent
that such fine, penalty, forfeiture, or damage
(The actual amount of Allowed Claims is not compensation for actual pecuniary loss
for Class 7 could materially exceed suffered by the holder of such Claim,
the including any such claim
12
Class Description Treatment Under Plan
- ----------------- --------------------
estimated amount shown herein). based upon, arising from, or relating to any
cause of action whatsoever (including, without
limitation, violation of law, personal injury,
or wrongful death, whether secured or
unsecured, liquidated or unliquidated, fixed
or contingent, matured or unmatured, known or
unknown, foreseen or unforeseen, then existing
or thereafter arising in law, equity or
otherwise).
Under the Plan, the holders of
Non-Compensatory Damages Claims will not
receive or retain any property under the Plan
on account of such Claims. All
Non-Compensatory Damages Claims will be
discharged as of the Effective Date.
Non-Compensatory Damages Claims are Impaired
and will receive no distribution under the
Plan. The holders of such Claims are,
therefore, deemed to have rejected the Plan
and are not entitled to vote on the Plan.
Estimated Percentage Recovery: 0%
Class 8, Amcast Interests Class 8 consists of Amcast Interests which are
collectively, all equity interests in Amcast
and its Debtor affiliates (other than Amcast's
equity interests in the other affiliated
debtor entities), including, without
limitation, the Old Amcast Common Stock, and
any warrants, option rights, conversion
rights, rights of first refusal, causes of
action, or other rights, contractual or
otherwise, to acquire or receive any stock or
other equity ownership interests in Amcast or
any of its Debtor affiliates, and any
contracts, subscriptions, commitments, or
agreements pursuant to which a party was or
could have been entitled to receive shares,
securities, or other ownership interests in
Amcast or any of its Debtor affiliates as of
the Petition Date.
Under the Plan, all Amcast Interests of any
kind, will be cancelled as of the Effective
Date and the holders thereof will not receive
or retain any property under the Plan on
account of such Interests.
Amcast Interests are Impaired and will receive
no distribution under the Plan. The holders of
such Interests are, therefore, deemed to have
rejected the Plan and are not entitled to vote
on the Plan.
13
Class Description Treatment Under Plan
- ----------------- --------------------
Estimated Percentage Recovery: 0%
THE DEBTORS BELIEVE THAT THE PLAN PROVIDES THE BEST RECOVERIES POSSIBLE
FOR HOLDERS OF CLAIMS AGAINST THE DEBTORS AND THUS STRONGLY RECOMMEND THAT YOU
VOTE TO ACCEPT THE PLAN.
ARTICLE III
PLAN VOTING INSTRUCTIONS AND PROCEDURES
A. Notice to Holders of Claims and Interests. Approval by the Bankruptcy
Court of this Disclosure Statement means that the Bankruptcy Court has found
that this Disclosure Statement contains information of a kind and in sufficient
and adequate detail to enable holders of Claims to make an informed judgment
whether to accept or reject the Plan. THE BANKRUPTCY COURT'S APPROVAL OF THIS
DISCLOSURE STATEMENT OR THE SUMMARY, IF ANY, DOES NOT CONSTITUTE EITHER A
GUARANTEE OF THE ACCURACY OR COMPLETENESS OF THE INFORMATION CONTAINED HEREIN OR
THEREIN OR AN ENDORSEMENT OF THE PLAN BY THE BANKRUPTCY COURT.
IF THE PLAN IS APPROVED BY THE REQUISITE VOTE OF HOLDERS OF CLAIMS
ENTITLED TO VOTE AND IS SUBSEQUENTLY CONFIRMED BY THE BANKRUPTCY COURT, THE PLAN
WILL BIND ALL HOLDERS OF CLAIMS AGAINST, AND INTERESTS IN, THE DEBTORS, WHETHER
OR NOT THEY WERE ENTITLED TO VOTE OR DID VOTE ON THE PLAN AND WHETHER OR NOT
THEY RECEIVE OR RETAIN ANY DISTRIBUTIONS OR PROPERTY UNDER THE PLAN. THUS ALL
HOLDERS OF CLAIMS AGAINST THE DEBTORS ENTITLED TO VOTE ARE ENCOURAGED TO READ
THIS DISCLOSURE STATEMENT AND ITS APPENDICES AND SCHEDULES CAREFULLY AND IN
THEIR ENTIRETY BEFORE DECIDING TO VOTE EITHER TO ACCEPT OR REJECT THE PLAN.
THIS DISCLOSURE STATEMENT AND THE PLAN ARE THE ONLY DOCUMENTS AUTHORIZED
BY THE BANKRUPTCY COURT TO BE USED IN CONNECTION WITH THE SOLICITATION OF VOTES
TO ACCEPT OR REJECT THE PLAN. No solicitation of votes may be made except after
distribution of this Disclosure Statement, or the approved summary, if any, and
no person has been authorized to distribute any information concerning the
Debtors other than the information contained herein or therein. No such
unauthorized information should be relied upon in making a determination to vote
to accept or reject the Plan. Following distribution of this Disclosure
Statement, the Debtors and all other parties in interest shall be entitled to
solicit votes to accept or reject the Plan.
B. Voting Rights. Pursuant to the provisions of the Bankruptcy Code, only
holders of claims and interests in classes that are (a) treated as "impaired" by
a plan of reorganization and (b) entitled to receive a distribution under such
plan are entitled to vote on the plan. In this Chapter 11 Case, under the Plan,
only holders of Claims in classes 2, 3, 4 and 5 are entitled to vote on the
Plan. Claims and Interests in other Classes are either unimpaired and their
holders
14
are deemed to have accepted the Plan, or they are receiving no distributions
under the Plan and their holders are deemed to have rejected the Plan.
Notwithstanding the foregoing, only holders of Allowed Claims in the
voting Classes are entitled to vote on the Plan. A Claim which is unliquidated,
contingent or disputed is not an Allowed Claim, and is thus not entitled to
vote, unless and until the amount is estimated or determined, or the dispute is
determined, resolved or adjudicated in the Bankruptcy Court or another court of
competent jurisdiction, or pursuant to agreement with the Debtors. However, the
Bankruptcy Court may deem a contingent, unliquidated or disputed Claim to be
allowed on a provisional basis, for purposes only of voting on the Plan. If your
Claim is contingent, unliquidated or disputed, you will receive instructions for
seeking temporary allowance of your Claim for voting purposes, and it will be
your obligation to obtain an order provisionally allowing your Claim.
Holders of Allowed Claims in the voting Classes may vote on the Plan only
if they are holders as of the VOTING RECORD DATE.
C. Solicitation Materials. In soliciting votes for the Plan pursuant to
this Disclosure Statement or the approved summary, if any, the Debtors, through
their voting agent JPMorgan Trust Company, National Association (the "Voting
Agent"), will send to holders of Claims who are entitled to vote copies of (a)
the Disclosure Statement and Plan, (b) the notice of, among other things, (i)
the date, time and place of the hearing to consider confirmation of the Plan and
related matters and (ii) the deadline for filing objections to confirmation of
the Plan (the "Confirmation Hearing Notice"), (c) one or more ballots (and
return envelopes) to be used in voting to accept or to reject the Plan and (d)
other materials as authorized by the Bankruptcy Court.
If you are the holder of a Claim who is entitled to vote, but you did not
receive a ballot, or if your ballot is damaged or illegible, or if you have any
questions concerning voting procedures, you may contact the following:
JPMorgan Trust Company, National Association
c/o Administar Services Group
8475 Western Way, Suite 110
Jacksonville, FL 32256
Tel: (904) 807-3023
D. Voting Procedures, Ballots and Voting Deadline. After carefully
reviewing the Plan, this Disclosure Statement, and the detailed instructions
accompanying your ballot, you are asked to indicate your acceptance or rejection
of the Plan by voting in favor of or against the Plan on the accompanying
ballot. You should complete and sign your original ballot (copies will not be
accepted) and return it as instructed in the envelope provided.
Each ballot has been coded to reflect the Class of Claims it represents.
Accordingly, in voting to accept or reject the Plan, you must use only the coded
ballot or ballots sent to you with this Disclosure Statement.
15
IN ORDER FOR YOUR VOTE TO BE COUNTED, YOUR BALLOT MUST BE PROPERLY
COMPLETED AS SET FORTH ABOVE AND IN ACCORDANCE WITH THE VOTING INSTRUCTIONS ON
THE BALLOT AND RECEIVED NO LATER THAN _____________, 2005 AT 4:00 P.M. EASTERN
TIME (THE "VOTING DEADLINE") BY THE FOLLOWING:
JPMorgan Trust Company, National Association
c/o Administar Services Group
8475 Western Way, Suite 110
Jacksonville, FL 32256
ATTENTION: AMCAST INDUSTRIAL CORPORATION
UNLESS OTHERWISE PROVIDED IN THE INSTRUCTIONS ACCOMPANYING THE BALLOTS,
FAXED BALLOTS WILL NOT BE ACCEPTED. BALLOTS THAT ARE RECEIVED BUT NOT SIGNED
WILL NOT BE COUNTED. BALLOTS THAT ARE SIGNED BUT DO NOT SPECIFY WHETHER THE
HOLDER ACCEPTS OR REJECTS THE PLAN WILL BE COUNTED AS AN ACCEPTANCE. DO NOT
RETURN ANY STOCK CERTIFICATES, DEBT INSTRUMENTS OR OTHER EVIDENCES OF YOUR CLAIM
WITH YOUR BALLOT.
If you have any questions about (a) the procedure for voting your Claim,
(b) the packet of materials that you have received, or (c) the amount of your
Claim, or if you wish to obtain, at your own expense, unless otherwise
specifically required by Bankruptcy Rule 3017(d), an additional copy of the
Plan, this Disclosure Statement or any appendices or exhibits to such documents,
please contact:
THOMPSON HINE LLP
3900 KEY CENTER, 127 PUBLIC SQUARE
CLEVELAND, OHIO 44114-1291
TELEPHONE: (216) 566-5500
ATTENTION: Jeremy M. Campana, Esq.
For further information and general instruction on voting to accept or
reject the Plan, see Article XII of this Disclosure Statement and the
instructions accompanying your ballot.
THE DEBTORS URGE ALL HOLDERS OF CLAIMS ENTITLED TO VOTE TO EXERCISE THEIR
RIGHT BY COMPLETING THEIR BALLOTS AND RETURNING THEM BY THE VOTING DEADLINE.
E. Special Notice Concerning Voting.
1. Releases with Respect to Holders of Claims that Vote to Accept
the Plan.
(a) Releases from Holders of Claims that Vote to Accept the
Plan. PURSUANT TO THE PLAN, EACH HOLDER OF A CLAIM THAT
AFFIRMATIVELY VOTES IN FAVOR OF THE PLAN WILL BE DEEMED TO FOREVER
RELEASE, WAIVE AND DISCHARGE ALL CLAIMS,
16
OBLIGATIONS, SUITS, JUDGMENTS, DAMAGES, DEMANDS, DEBTS, RIGHTS,
CAUSES OF ACTION, AND LIABILITIES AGAINST (I) THE DEBTORS'
NON-DEBTOR SUBSIDIARIES, (II) THE PREPETITION SECURED LENDERS, THE
PREPETITION SECURED LENDER AGENT, THE CREDITORS COMMITTEE (BUT NOT
ITS MEMBERS IN THEIR INDIVIDUAL CAPACITIES), AND THEIR RESPECTIVE
PRESENT AGENTS OR PROFESSIONALS, AND (III) ANY OF THE DIRECTORS,
OFFICERS AND EMPLOYEES OF THE DEBTORS SERVING IMMEDIATELY PRIOR TO
THE EFFECTIVE DATE, THOSE OF DEBTORS' DIRECTORS, OFFICERS AND
EMPLOYEES DESIGNATED ON EXHIBIT C TO THE PLAN, AND ANY OF THE
DEBTORS' PRESENT AGENTS OR PROFESSIONALS (INCLUDING ANY
PROFESSIONALS RETAINED BY THE DEBTORS), (ALL OF THE FOREGOING BEING
REFERRED TO COLLECTIVELY AS THE "CLAIMHOLDER RELEASEES") IN
CONNECTION WITH OR RELATED TO THE DEBTORS, THE CHAPTER 11 CASE, OR
THE PLAN (OTHER THAN THE RIGHTS UNDER THE PLAN AND THE CONTRACTS,
INSTRUMENTS, RELEASES, INDENTURES AND OTHER AGREEMENTS OR DOCUMENTS
DELIVERED THEREUNDER), WHETHER LIQUIDATED OR UNLIQUIDATED, FIXED OR
CONTINGENT, MATURED OR UNMATURED, KNOWN OR UNKNOWN, FORESEEN OR
UNFORESEEN, THEN EXISTING OR THEREUNDER ARISING, IN LAW, EQUITY, OR
OTHERWISE, THAT ARE BASED IN WHOLE OR PART ON ANY ACT, OMISSION,
TRANSACTION, EVENT, OR OTHER OCCURRENCE TAKING PLACE ON OR PRIOR TO
THE EFFECTIVE DATE IN ANY WAY RELATING TO THE DEBTORS OR THE
REORGANIZED DEBTORS, THE CHAPTER 11 CASE, OR THE PLAN; PROVIDED,
HOWEVER, THAT AN AFFIRMATIVE VOTE IN FAVOR OF THE PLAN SHALL NOT
RELEASE ANY PERSON (OTHER THAN THE DEBTORS) FROM ANY CONTRACTUAL
OBLIGATION OWED TO THE HOLDER OF A CLAIM, INCLUDING WITHOUT
LIMITATION, OBLIGATIONS UNDER PROMISSORY NOTES, GUARANTEES, OR
SIMILAR INSTRUMENTS, WHETHER RELATED TO THE DEBTORS OR OTHERWISE.
Creditors may have independent claims against one or more of
the Claimholder Releasees. The Debtors have no actual knowledge of
any such claims, but cannot warrant to creditors that they do not
exist. Since a vote in favor of the Plan will release whatever
creditor claims do exist, if any, against Claimholder Releasees,
creditors should consult their own counsel for information and
advice as to whether any such claims exist and the value or merit of
any such claims. If a creditor does not wish to give the releases
contemplated under the Plan, then the creditor should vote to reject
the Plan. Any party in interest may object to the proposed third
party release provisions. The Debtors have the burden of proof at
the Confirmation Hearing to satisfy the applicable standards for
third party releases.
(b) Releases in Favor of Holders of Claims that Vote to Accept
the Plan. EACH OF THE CLAIMHOLDER RELEASEES WILL BE DEEMED TO
17
FOREVER RELEASE, WAIVE AND DISCHARGE ANY CLAIMS, OBLIGATIONS, SUITS,
JUDGMENTS, DAMAGES, DEMANDS, DEBTS, RIGHTS, CAUSES OF ACTION AND
LIABILITIES WHATSOEVER TAKING PLACE ON OR PRIOR TO THE EFFECTIVE
DATE IN ANY WAY RELATING TO THE DEBTORS OR THE REORGANIZED DEBTORS,
THE CHAPTER 11 CASE, OR THE PLAN, AGAINST EACH HOLDER OF A CLAIM
THAT AFFIRMATIVELY VOTES IN FAVOR OF THE PLAN. THE FOREGOING RELEASE
DOES NOT COVER AVOIDANCE ACTIONS UNDER SECTIONS 544, 547, 548, 549,
550 AND 553 OF THE BANKRUPTCY CODE WHICH ARE RESERVED UNDER THE PLAN
AND MAY BE PURSUED BY THE REORGANIZED DEBTORS. SEE ARTICLE VI.J.2,
INFRA.
F. Confirmation Hearing and Deadline for Objections to Confirmation.
Pursuant to Section 1128 of the Bankruptcy Code and Bankruptcy Rule 3017(c), the
Bankruptcy Court has scheduled a Confirmation Hearing for _________, 2005, at
_______, Eastern Time. The Confirmation Hearing may be adjourned from time to
time by the Bankruptcy Court without further notice except for the announcement
of the adjournment date made at the Confirmation Hearing or at any subsequent
adjourned Confirmation Hearing. Objections to Confirmation of the Plan must be
made in writing and must specify in detail the name and address of the objector,
all grounds for the objection, and the amount and Class of the Claim or Interest
held by the objector. Any such objection must be filed with the Bankruptcy Court
on or before ____________, 2005, at _______ p.m. Eastern Time. Objections to
Confirmation of the Plan are governed by Bankruptcy Rule 9014.
ARTICLE IV
GENERAL INFORMATION CONCERNING THE DEBTORS
A. Corporate Information Concerning Debtors. Amcast was organized as an
Ohio corporation under the name The Dayton Malleable Iron Company on July 8,
1869. Its name was changed to Dayton Malleable Inc. on December 14, 1973 and to
Amcast Industrial Corporation on December 14, 1983. The other Debtors are
comprised of (i) the eleven, direct or indirect, wholly-owned subsidiaries of
Amcast listed below, (ii) LBC Group Corp., a 96.5% owned subsidiary, (iii)
Casting Technology Company, a joint venture partnership, and (iv) AS
International, Inc., a wholly-owned limited liability company. Certain
information concerning these subsidiaries, the joint venture partnership and the
limited liability company, all of whom are Debtors, is as follows:
1. Amcast Automotive of Indiana, Inc. ("Amcast Indiana") was
incorporated in the State of Indiana on July 26, 1983 as DMI-TEK Inc.
("DMI"). Amcast acquired fifty percent (50%) of the stock of DMI in 1983
as a joint venture with Dynamark, Inc. and later acquired the remaining
stock of DMI on or about January 15, 1987. In 2000, DMI changed its name
to Amcast Automotive of Indiana, Inc. Amcast Indiana is engaged in the
business of manufacturing cast aluminum wheels for use on automobiles and
light trucks. Amcast Indiana employs approximately 590 employees at two
locations, one in Fremont, Indiana and the other in Gas City, Indiana. The
majority of
18
Amcast Indiana's employees are involved in manufacturing, with the balance
engaged in administrative and clerical activities. For the fiscal year
ending August 31, 2004 ("Fiscal 2004"), Amcast Indiana had, on an
unaudited basis, net sales and adjusted EBITDA of approximately
$130,719,000 and $18,386,000, respectively.
2. Speedline North America, Inc. ("Speedline") was incorporated in
the State of Indiana on February 22, 2000. Speedline is a wholly-owned
subsidiary of Amcast Indiana. Speedline is currently an inactive
corporation and does not employ any individuals.
3. Amcast Casting Technologies, Inc. ("ACT") was incorporated in the
State of Indiana on November 22, 1993 and is a wholly-owned subsidiary of
Amcast. ACT was incorporated for the sole purpose of acquiring a joint
venture partnership interest in CTC (defined below) in November 1993. ACT
currently owns a 60% partnership interest in CTC. ACT has no employees.
4. Izumi, Inc. ("Izumi") was incorporated in the State of Delaware
on May 26, 1992. Izumi was incorporated for the sole purpose of acquiring
a joint venture partnership interest in CTC in November 1993. On or about
May 31, 2001, Amcast acquired 100% of the issued and outstanding stock of
Izumi. Izumi currently owns a 40% partnership interest in CTC. Izumi has
no employees.
5. Casting Technology Company ("CTC") was formed as a joint venture
partnership by ACT and Izumi on or about November 22, 1993. CTC is located
in Franklin, Indiana, and is engaged in the business of using proprietary
squeeze casting technology in the production of aluminum vehicle
suspensions, brake systems and steering knuckles for use on automobiles
and light trucks. CTC employs approximately 90 employees. The majority of
CTC's employees are involved in manufacturing, with the balance engaged in
administrative and clerical activities. For Fiscal 2004, CTC had, on an
unaudited basis, combined net sales and adjusted EBITDA of approximately
$22,572,000 and $3,454,000, respectively.
6. Amcast Automotive, Inc. ("AAI"), was incorporated in the State of
Michigan on August 31, 1987 as Midwest Marketing Services, Inc. On or
about August 19, 1994, Midwest Marketing Services, Inc. changed its name
to Amcast Automotive, Inc. AAI is a wholly-owned subsidiary of Amcast. AAI
sold substantially all of its assets on or about August 23, 2004 and
currently has five employees.
7. Amcast Plumbing, Inc. ("API") was incorporated in the State of
Indiana as Elkhart Products Corporation ("Elkhart") on or about December
14, 1977. Amcast acquired 100% of the stock of Elkhart on or about July
29, 1983. Elkhart sold substantially all of its assets on or about August
2, 2004. In connection with the sale of its assets, Elkhart changed its
name to Amcast Plumbing, Inc. on or about August 2, 2004. As a consequence
of the sale of substantially all of its assets, API currently has no
business operations or employees.
19
8. LBC Group Corp. ("LBC Group") was incorporated in the State of
Delaware on April 16, 1997. LBC Group is a wholly-owned subsidiary of
Amcast, which acquired one hundred percent (100%) of the stock of LBC
Group on or about April 9, 1998. LBC Group is a holding company and does
not employ any individuals. LBC Group owns 96.5% of the stock of Lee Brass
Company ("LBC"). Halstead Industries, Bopp & Reuther and Alabama Gas
Corporation own 1.21%, 1.19% and 1.09% of the stock of LBC, respectively.
9. LBC was incorporated in the State of Delaware on October 22,
1986. LBC is located in Anniston, Alabama and is engaged in the business
of manufacturing cast brass products and components for use in connection
with residential, commercial, industrial and marine plumbing systems. As
of August 31, 2004, LBC employed approximately 235 employees. The majority
of LBC's employees are involved in manufacturing, with the balance engaged
in administrative and clerical activities. For Fiscal 2004, LBC had, on an
unaudited basis, net sales and adjusted EBITDA of approximately
$32,699,000 and $1,231,000, respectively.
10. Amcast Industrial Financial Services, Inc. ("AIFS") was
incorporated in the State of Ohio on or about August 27, 1984 and is a
wholly-owned subsidiary of Amcast. AIFS does not employ any individuals or
have any ongoing business operations.
11. Amcast Investment Services Corporation ("AISC") was incorporated
in the State of Delaware on December 27, 1995 and is a wholly-owned
subsidiary of Amcast. On December 29, 1995, Amcast Industrial Investment,
a former subsidiary of Amcast, merged into AISC, with AISC as the
surviving corporation. AISC maintains its registered offices in
Wilmington, Delaware and employs one individual. AISC functions as a
passive investment company for tax planning purposes.
12. Amcast Aviation Corporation ("Amcast Aviation") was incorporated
in the State of Ohio on or about July 18, 1985 and is a wholly-owned
subsidiary of Amcast. Amcast Aviation does not actively conduct any
business within or outside the State of Ohio and does not employ any
individuals.
13. Amcast Precision Products, Inc. ("Amcast Precision") was
incorporated in the State of California on or about May 1, 1984 as Hemet
Steel Casting Corporation. Amcast acquired 100% of the stock of Hemet
Steel Casting on or about June 29, 1987 and subsequently changed the name
of the corporation to Amcast Precision Products, Inc. Amcast sold the
assets of Amcast Precision in March 1998. Consequently, Amcast Precision
is no longer an active corporation and does not employ any individuals.
14. Flagg Brass, LLC ("Flagg") is a limited liability company
organized under the laws of the State of Ohio. Amcast is the sole member
of Flagg. For federal tax purposes, Flagg is treated as a division of
Amcast. Flagg maintains assets in Stowe, Pennsylvania, but does not employ
any individuals and does not have any ongoing business operations.
20
15. AS International, Inc. ("AS International") was incorporated in
the State of Delaware on or about June 12, 1997 and is a wholly-owned
subsidiary of Amcast. AS International is a holding company and does not
employ any individuals and has no ongoing business operations.
B. Overview of Business Operations. For more than 100 years, Amcast's core
business had been the operation of iron and steel foundries that manufactured
large, heavy castings for original equipment manufacturers in the
transportation, construction, air-conditioning and refrigeration industries. In
the early 1980s, Amcast embarked on a restructuring program that involved the
sale of all twelve of its iron and steel foundries and the transformation of
Amcast into a manufacturer of technology-intensive metal products in a variety
of shapes, sizes, and metals for sale to end users, distributor and wholesaler
organizations, and original equipment manufacturers and suppliers. After the
restructuring, Amcast operated in two business segments - Engineered Components
and Flow Control.
1. Engineered Components. The objectives of the Engineered
Components business were to develop and produce high-integrity,
lightweight aluminum cast products that required complex engineering and
were responsive to its OEM automotive customers needs to reduce car weight
for fuel efficiency and to reduce the cost of components. The Engineered
Components segment manufactured three principal product lines: aluminum
wheels, components, and squeeze-cast components.
(a) Aluminum Wheels. Amcast began manufacturing aluminum
wheels in 1984 at its Fremont, Indiana facility (145,000 square
feet) and commenced wheel manufacturing operations at its Gas City,
Indiana facility (196,000 square feet) in January 1993. Aluminum
wheels are favored in the marketplace because they are lightweight,
which helps to reduce fuel consumption and emissions, and have
distinctive styling and cosmetic appeal to consumers. Amcast
engineers work closely with OEM designers and engineers to develop
distinctive, decorative aluminum wheels for future model years and
to develop and purchase the tooling necessary to manufacture these
wheels. Aluminum wheels accounted for approximately $132,719,000 of
sales in Fiscal 2004.
(b) Squeeze-cast products. Amcast began producing squeeze-cast
components at its Franklin, Indiana facility (183,000 square feet)
in 1993 in a joint venture arrangement with a Japanese company.
Amcast acquired 100% of the joint venture in May 2001. At this
facility, a squeeze casting method is used to produce aluminum
automotive suspension, brake system, and air conditioner compressor
products. Squeeze-cast products accounted for approximately
$22,572,000 of sales in Fiscal 2004.
(c) Components. Amcast produced aluminum components for
automotive customers at the Cedarburg, Wisconsin facility (149,000
square feet), the Richmond, Indiana facility (97,000 square feet)
and the Wapakoneta, Ohio facility (206,000 square feet). Amcast sold
its aluminum components business, including the manufacturing
facilities located in Richmond, Indiana and
21
Wapakoneta, Ohio, to Park-Ohio Holdings Corporation ("Park Ohio") on
August 23, 2004. The land and building located in Cedarburg,
Wisconsin were not conveyed to Park Ohio due to certain
environmental issues associated with that facility.
2. Flow Control. Amcast's Flow Control business was established
through the acquisition of four businesses: Stanley G. Flagg & Company in
1982, Elkhart Products Corporation in 1983, Superior Valve Company in
1986, and the Lee Brass Company in 1998. The Superior Valve Company was
sold in 1998. Until recently, the Flow Control segment consisted of two
principal product lines.
(a) Elkhart Plumbing Products. With the acquisition of Elkhart
Products Corporation in 1983, Amcast became a leading manufacturer
of copper plumbing fittings, having the broadest line of copper
plumbing fittings available in the United States. Its copper
fittings, which included tees, elbows, adapters, couplings and
unions, are used in new construction and maintenance as well as in
the retrofitting of plumbing, air conditioning and refrigeration
systems in existing structures. Its sales were about evenly divided
between commercial and residential users. Elkhart plumbing products
were manufactured at facilities in Elkhart, Indiana (222,000 square
feet), Fayetteville, Arkansas (108,000 square feet), and Geneva,
Indiana (106,000 square feet). Amcast sold its Elkhart plumbing
business, including the three manufacturing facilities mentioned in
this subparagraph, to a U.S. subsidiary of the Dutch group Aalberts
Industries N.V. on August 2, 2004.
(b) Lee Brass Products. Amcast acquired its Lee Brass product
line with the acquisition of LBC in 1998. Lee Brass products consist
of a line of cast brass products for use in residential, commercial,
and industrial plumbing systems. With the acquisition of LBC, Amcast
closed its Flagg Brass foundry in Stowe, Pennsylvania in 1998 and
consolidated the Flagg line with Lee Brass. Amcast's brass products
and components are manufactured at its Anniston, Alabama facility
(425,000 square feet). As of August 31, 2004, LBC employed
approximately 235 employees. The majority of LBC's employees are
involved in manufacturing, with the balance engaged in
administrative and clerical activities. Brass products accounted for
approximately $32,699,000 of sales in Fiscal 2004.
C. Summary of Current Operations. The following is a summary of key
information concerning Amcast's current operations at December 1, 2004:
1. ENGINEERED COMPONENTS - Cast Aluminum Wheels
*Projected sales for Fiscal 2005 - $126,400,000
*Facilities and employees at December 1, 2004:
*Fremont, Indiana; owned facility; 145,000 square feet; used for
casting, machining and painting aluminum wheels; 312 employees, none
of whom are covered by collective bargaining agreements.
22
*Gas City, Indiana; land leased under 99-year lease expiring in
2091; 196,000 square feet; used for casting, machining and painting
aluminum wheels; 274 employees, none of whom are covered by
collective bargaining agreements.
*Detroit, Michigan; leased with a term expiring on August 31, 2005;
approximately 24,000 square feet; used for automotive prototype
processing and parts storage for Fremont facility; no employees.
*Southfield, Michigan; sub-leased with a term expiring on August 31,
2005; 11,000 square feet; used for automotive sales, product
development and engineering; 5 employees, none of whom are covered
by collective bargaining agreements.
*Products sold directly to automotive OEMs. Principal customers in Fiscal
2004: General Motors Corporation, Daimler Chrysler, and Tecstar.
2. ENGINEERED COMPONENTS - Squeeze Cast Products
*Projected sales for Fiscal 2005 - $19,400,000
*Facilities and employees at December 1, 2004:
*Franklin, Indiana; owned facility; 183,000 square feet; high-volume
aluminum high-pressure squeeze casting plant used to produce
aluminum automotive suspension and air conditioner compressor
products; 78 employees, none of whom are covered by collective
bargaining agreements.
*Products sold directly to tier one automotive suppliers. Principal
customers in Fiscal 2004: Metaldyne and TRW.
3. FLOW CONTROL - Lee Brass Products
*Projected sales for Fiscal 2005 - $27,900,000
*Facilities and employees at December 1, 2004:
*Anniston, Alabama; owned facility; 425,000 square feet; brass
foundry, with machining, warehouse and distribution functions used
in connection with the manufacture and sale of a line of cast brass
products for use in residential, commercial, and industrial plumbing
systems; 232 employees, none of whom are covered by collective
bargaining agreements.
*Products sold for use in residential, commercial and industrial plumbing
systems. Lee Brass has a diverse customer base.
23
D. Management and Employees.
1. Board of Directors. Amcast's Board of Directors (the "Board" or
the "Board of Directors") oversees its management, reviews its long-term
strategic plans and exercises direct decision making authority in key
areas. Set forth below is information with respect to Amcast's Board
members:
- Byron O. Pond, Chairman of the Board and Chief Executive Officer of
Amcast, has been a director since February 2001, Chairman of the
Board since April 2002, and Chief Executive Officer since November
2004. He also served as Chief Executive Officer of Amcast from
February 2001 to July 2003. He was non-executive Chairman of the
Board from February 2004 to November 2004.
- Richard A. Smith has been a director of Amcast since December 2003
and Vice President and Chief Financial Officer since October 2004.
- Robert C. Ayotte has been a director of Amcast since December 2003.
- Don R. Graber has been a director of Amcast since July 2001.
- R. William Van Sant has been a director of Amcast since October
1993.
- Walter E. Blankley has been a director of Amcast since February
1994.
- William G. Roth has been a director of Amcast since December 1989.
Amcast's employee directors do not receive any compensation
for services performed as directors or for meeting attendance. Each
non-employee director receives a yearly stipend of $16,000 and is
paid $1,000 for each Board or committee meeting that he attends.
Non-employee directors who chair a standing committee receive an
additional $3,000 yearly stipend.
2. Executive Officers and Key Employees. Set forth below is
information with respect to Amcast's executive officers and key employees:
* Byron O. Pond, age 68, has been a director since February 2001,
Chairman of the Board since April 2002, and Chief Executive Officer since
November 2004. He also served as Chief Executive Officer of Amcast from
February 2001 to July 2003. He was non-executive Chairman of the Board
from February 2004 to November 2004. From February 2001 to April 2002, Mr.
Pond was President and Chief Executive Officer of Amcast. From 1996 to
1998, Mr. Pond served as Chairman and Chief Executive Officer of Arvin
Industries, Inc. (a leading manufacturer of automotive emission and ride
control systems) and from 1993 to 1996 as President and Chief Executive
Officer of Arvin. He became Arvin's President and Chief Operating Officer
in 1991. Mr. Pond is also a director of Cooper Tire & Rubber Company,
Precision Castparts Corp. and GSI Lumonics.
24
* Richard A. Smith, age 58, has been a director of Amcast since
December 2003 and Vice President and Chief Financial Officer since October
2004. Mr. Smith was Executive Vice President and Chief Financial Officer
for Lennox, International Inc. from 2001 to 2004. He was Chief Financial
Officer and Chief Administrative Officer for Zonetrader.com, a leading
provider of full-service asset management solutions from 2000 to 2001.
Prior to joining Zonetrader.com, Mr. Smith had served since 1990 as Vice
President of Finance and Chief Financial Officer for Arvin Industries,
Inc., a leading global manufacturer of automotive components.
* Dean Meridew, age 50, has been Vice President and General Manager of
the North American Wheel Division since September 1999. From September
1997 to September 1999, he was Vice President, Amcast Europe. From June
1992 to September 1997, he was Division Manager for Amcast's North
American wheel operations. Prior to that, Mr. Meridew was Operations
Manager and Engineering Manager within Amcast's North American wheel
operations since January 1985.
* Jeffrey A. McWilliams, age 41, has been Vice President of
Administration and Secretary of Amcast since August 2003. Mr. McWilliams
was Director of Taxation of Amcast from November 1996 to August 2003. From
1991 to 1996, he was Corporate Tax Manager for American Premier
Underwriters.
3. Employees/Labor Relations. As of the Petition Date, Amcast
employed approximately 920 employees in 5 states. A majority of Amcast's
employees are involved in production and operations, with the balance
engaged in administration, research and development, sales and customer
service. None of Amcast's current employees are subject to collective
bargaining agreements.
4. Compensation and Benefits.
(a) Prepetition Pension Plan. Amcast sponsors a defined
benefit pension plan covered by Title IV of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), 29 U.S.C.
Sections 1301-1461 and intended to be tax-qualified pursuant to
section 401(a) of the Internal Revenue Code. The defined benefit
pension plan covers certain current and former employees. On March
11, 2005, Amcast served on the participants in the defined benefit
pension plan a Notice of Intent to Terminate the plan effective May
31, 2005. Amcast has filed, or will file, a motion with the
Bankruptcy Court for approval of a distress termination of the plan
in accordance with the provisions of ERISA.
(b) Prepetition 401(k) Plans. Amcast also sponsors two (2)
defined contribution plans which are intended to be tax qualified in
accordance with Section 401(a) of the Internal Revenue Code of 1986,
as amended (the "Code") and to include qualified cash or deferred
arrangements, as described in Section 401(k) of the Code. One of
these plans covers only former unionized employees who were members
of one or more of the collective bargaining units set forth in the
plan. The other covers certain current and former employees. Amcast
intends to continue one or both of these plans, at least
temporarily.
25
(c) Postconfirmation Compensation and Benefits. After the
Effective Date and except for the defined benefit pension plan, the
Debtors intend to continue to provide compensation and benefits
consistent with those historically offered. Under the Plan, except
to the extent (i) previously assumed or rejected by an order of the
Bankruptcy Court on or before the Confirmation Date, or (ii) the
subject of a pending motion to reject filed by a Debtor on or before
the Confirmation Date, or (iii) previously terminated, or (iv) as
provided in Section 7.5(a) of the Plan, all compensation and benefit
programs of the Debtors, will be deemed to be, and will be treated
as though they are, executory contracts that are assumed under the
Plan. Nothing contained in the Plan is intended to modify the
existing terms of such compensation and benefit programs, including,
without limitation, the Debtors' rights of termination and amendment
thereunder.
(d) Key Employee Retention Plan. Following the filing of the
Debtors' Chapter 11 petition, the Debtors developed a Key Employee
Retention Plan (the "KERP Plan") that was designed to address the
heightened uncertainties facing certain key employees as a result of
the commencement of the Debtors' bankruptcy proceedings. On January
18, 2005, the Debtors filed with the Bankruptcy Court a motion for
an Order approving the KERP Plan (the "KERP Motion"). After
negotiations and agreement with the Creditors' Committee, the
Prepetition Secured Lenders and the Office of the United States
Trustee, on February 14, 2005, the KERP Plan was approved by the
Bankruptcy Court in the form of an agreed order (the "KERP Order").
The KERP Plan offers retention bonuses to the Debtors' Key Employees
in three separate categories:
(i) Group One:
Group 1 is comprised of eight Key Employees(2) who are
critical to the Debtors' survival during their Chapter 11
reorganization proceedings and to their successful emergence
from Chapter 11.
With respect to the two most senior members of Group 1, the
KERP Plan provides that the Debtors' Vice President - Finance
and CFO is eligible to receive up to 50%, and that the
Debtors' Vice President - Administration and Secretary is
eligible to receive up to 75%, of their respective annual base
salaries as a retention bonus. Those two Key Employees will
earn and receive their retention bonuses, provided they still
are then in the Debtors' employ, as follows: (a) one-half on
the date the Court approves the Disclosure Statement; and (b)
one-half on the first to occur of the date the Court confirms
the Debtors' plan of reorganization (the "Confirmation Date")
or the date the Debtors close a sale of all or substantially
all of their assets or stock (a "Sale Date").
- --------------------
(2) Notably, Byron O. Pond, the President and Chief Executive Officer of Amcast
Industrial Corporation, voluntarily has elected to forego any retention bonus
even though he currently plans to remain as President and CEO for the duration
of the reorganization process.
26
If, however, either of those two Key Employees voluntarily
terminates his employment with the Debtors prior to the
Confirmation Date (except as a result of his death or
disability), then such Key Employee promptly shall refund to
the Debtors all amounts (net of any payroll withholding taxes
and other deductions) he theretofor has received under the
KERP Plan.
The KERP Plan further provides that the other five members of
Group 1 are eligible to receive as a retention bonus an amount
equal to 50% of his or her annual base salary, provided each
such Key Employee still is employed by the Debtors on the
first to occur of the Confirmation Date or a Sale Date.
The aggregate maximum amount payable under the KERP Plan to
the members of Group One is $411,600.
(ii) Group Two:
Group 2 is comprised of eight Key Employees who are crucial to
the proper administration of the Debtors' businesses and to an
effective and efficient transition to a lower cost structure
after the Debtors emerge from Chapter 11.
The KERP Plan provides that the two most senior members of
Group 2 - the Treasurer and the Controller of the Debtors -
each is eligible to receive incentive compensation equal to
two weeks' pay for each week he is employed by the Debtors
after the Petition Date (subject to a maximum bonus of 26
weeks' pay). The other six members of Group 2 each is eligible
to receive incentive compensation equal to one weeks' pay for
each week he or she is employed by the Debtors after the
Petition Date (subject to a maximum bonus of 12 weeks' pay).
Earned incentive compensation will be paid bi-weekly in
accordance with the Debtors' normal payroll practices
beginning immediately after the Key Employee's termination of
employment. The aggregate maximum amount payable under the
KERP Plan to the members of Group 2 is $223,900.
(iii) Group Three:
Group 3 is comprised of seven managers who are responsible for
the operations of the Debtors' manufacturing facilities
including, without limitation, managing the Debtors'
day-to-day logistical interaction with their suppliers and
customers.
The KERP Plan provides that one of these Key Employees is
eligible to receive a retention bonus equal to 75% of his
annual base salary provided he remains in the Debtors' employ
for at least 90 days following the Confirmation Date or until
a Sale Date, whichever first occurs.
27
The KERP Plan also provides that the other six members of
Group 3 each is eligible to receive 30% of his annual base
salary subject to the same condition. Key Employees in Group 3
will receive their bonuses in one lump sum payable on the
first business day that follows the 90th day after the
Confirmation Date or on a Sale Date, as the case may be.
The aggregate maximum amount payable under the KERP Plan to
the members of Group 3 is $376,500.
Each Key Employee who has earned a retention bonus or incentive
compensation under the KERP Plan as described above shall be
required, as a condition precedent to the Debtors' payment of any
such benefits, to release in writing any and all claims such Key
Employee has, or may have, against any of the Debtors or the
Debtors' estates, except as provided in the KERP Order.
In addition, under the KERP Plan all Key Employees will continue to
be covered by the Debtors' self-insured medical plan during their
employment and for any post-employment period over which his or her
retention bonus or incentive compensation is payable and all Key
Employees will be entitled to be paid upon their termination of
employment for their earned but unused vacation time (including
vacation time accrued prior to the Petition Date).
Future compensation and benefit decisions will be made by the Board
of Directors of Reorganized Amcast. Depending upon such decisions,
there is no assurance that Key Employees will continue in the employ
of the Reorganized Debtors.
E. Prepetition Capital Structure of Amcast
Prepetition Equity (through but not including the Effective Date). Amcast
is currently authorized to issue 15,000,000 common shares, without par
value, and 1,000,000 preferred shares. As of December, 2004, there were
approximately 9,709,000 common shares outstanding and no preferred shares
were outstanding. Amcast's common shares are registered under Section
12(g) of the Securities Exchange Act of 1934. Amcast's common shares were
traded on the New York Stock Exchange under the symbol "AIZ" until April
1, 2003. On April 1, 2003, Amcast common shares ceased trading on the New
York Stock Exchange and began trading on the OTC Bulletin Board under the
symbol "AICO.OB." As of December 31, 2004, there were 5,600 holders of
record of the Amcast's common shares. Amcast believes the following
entities own more than 5% of its outstanding common shares: Sligo
Partners, Amcast Salary Deferral Plans, Dimensional Fund Advisors and AXA
Rosenberg Investment Management. On the Effective Date, Amcast will amend
its Certificate of Incorporation providing that as of the Effective Date
the authorized common shares of Reorganized Amcast will be 1,000 shares.
1. Material Prepetition Debt Obligations.
(a) Debtors' material prepetition debt obligations are
governed by the Prepetition Transaction Documents which consist of:
(i) the Prepetition Secured
28
Credit Agreement, (ii) the Line of Credit Documents, (iii) the
Northwestern Note Agreement, and (iv) the Principal Note Agreement.
Said Prepetition Transaction Documents are specifically defined in
the Plan. All of the prepetition debt obligations governed by the
Prepetition Transaction Documents are secured by security interests
and liens in virtually all of the Debtors' assets. The principal
amount due and owing as of the Petition Date by individual tranche
of secured debt is as follows: (a) $67,874,308 in aggregate
principal amount was due and owing under the Prepetition Secured
Credit Agreement; (b) $9,918,321 in aggregate principal amount was
due and owing under the Prepetition Line of Credit Documents; (c)
$30,558,514 in aggregate principal amount collectively was due and
owing under the Northwestern Note Agreement and the Principal Note
Agreement.
(b) Litigation Claims. The Debtors are involved in claims,
litigation, administrative proceedings, and certain environmental
proceedings, including the cases discussed below.
(i) Valleycrest Litigation. On January 29, 1998,
Cargill, Inc. and eight other plaintiffs brought a superfund
private cost recovery and contribution action against Amcast
and fifty other parties in the United States District Court
for the Southern District of Ohio, Western Division, which is
captioned, Cargill, Inc. et al. v. Abco Construction, et al.
(Case No. C-3-98-3601). The action involves the Valleycrest
disposal site in the Dayton, Ohio area (the "Site"). The
plaintiffs have taken the lead in investigating and
remediating the Site and are asking for an aggregate judgment
against the defendants for an amount, which exceeds $31
million. Based on information to date, Amcast believes it has
valid defenses against the plaintiffs' claims. Amcast believes
its responsibility with respect to the Site is very limited
due to the inert nature of the foundry sand waste that Amcast
disposed of at the Site. While the outcome of this matter
cannot be predicted with any certainty, Amcast believes that
its ultimate liability in this matter will not exceed
$400,000.
(ii) Anniston Litigation. On June 5, 2003, Solutia, Inc.
and Pharmacia Corporation brought a superfund private cost
recovery and contribution action against Amcast and eighteen
other parties in the United States District Court for the
Northern District of Alabama, Eastern Division, which is
captioned, Solutia, Inc and Pharmacia Corporation v. McWane,
Inc., et al. (Case No. CV-03-PWG-1345-E). The action involves
the Anniston PCB Site and the Anniston Lead Site in Calhoun
County Alabama and Talladega County Alabama (the "Sites"). The
plaintiffs have taken the lead in investigating and
remediating the Sites and are asking for an aggregate judgment
against the defendants in the amount of $34.5 million. Based
on information to date, Amcast believes it has valid defenses
against the plaintiffs' claims. Amcast believes its
responsibility with respect to the Sites is very limited.
While the outcome of this matter cannot be predicted with any
certainty, Amcast does not believe that this
29
matter will have a material adverse effect on its results of
operations or financial position.
F. Summary of Assets. The Debtors have filed Schedules with the Bankruptcy
Court that detail the assets owned by each of the Debtors as of the Petition
Date. Such assets include real property, cash on hand, bank accounts and
investments, security deposits, insurance policies, stock interests, accounts
receivable, intellectual property, vehicles, office equipment, furnishings and
supplies, machinery, fixtures, equipment and supplies used in business,
inventory and other items of personal property. Except as otherwise noted
therein, the Schedules provide asset values on a net book basis, which are not
reflective of actual values. The Schedules may be reviewed during business hours
in the offices of the Clerk of the Bankruptcy Court or the Debtors' counsel. The
Schedules may also be viewed and downloaded via the Debtors' website at:
HTTP://WWWDEV.THOMPSONHINE.COM/PRACTICEGROUPS/BANKRUPTCY/AMCAST/ Information as
to the Debtors' assets is also available in the balance sheets included in the
financial data attached hereto as Appendix D and in the liquidation analysis
attached hereto as Appendix E.
G. Historical Financial Information. Attached as Appendix D are the
unaudited financial statements for Amcast for the three years ended August 31,
2003 and unaudited financial statements for the fiscal year ended August 31,
2004. The financial data for and as of August 31, 2004 has been reviewed by
Amcast's outside accountants but has not been audited. The financial data for
the three years ended August 31, 2003 has been reproduced from the audited
financial statements for the fiscal year ended August 31, 2003, 2002, and 2001
but, due to its inclusion in this Disclosure Statement, is considered unaudited
under applicable accounting rules. In preparing its financial statements, Amcast
has followed the accounting directives as set forth in the American Institute of
Certified Public Accountants' Statement of Position 90-7, "Financial Reporting
by Entities in Reorganization Under the Bankruptcy Code."
H. Events Leading to Commencement of the Chapter 11 Case.
During the past decade, in an effort to solidify its relationships with a
number of key OEM customers and to diversify its manufacturing operations,
Amcast acquired certain businesses and established manufacturing plants that,
due to a variety of economic and operational issues, it was unable to operate
profitably. Specifically, the acquisition of an Italian wheel manufacturing
business and investments in several aluminum component manufacturing plants
burdened Amcast with significant amounts of debt and serious operational
difficulties.
Due to operating losses incurred during its second fiscal quarter in 2001,
Amcast breached several non-monetary covenants under the Prepetition Secured
Credit Agreement. This breach resulted in cross defaults under the Northwestern
Note Agreement and the Principal Note Agreement. Amounts owed to the Prepetition
Secured Lenders under the Prepetition Secured Credit Agreement and to the
Noteholders under the Northwestern Note Agreement and the Principal Note
Agreement were secured by security interests in virtually all of the assets of
Amcast and its affiliated Debtors.
Following the occurrence of the covenant defaults, Amcast negotiated a
series of waivers and other financial accommodations designed to address its
financial and operational problems
30
and forestall the exercise of remedies by the Prepetition Secured Lenders and
the Noteholders. On March 17, 2003, Amcast sold its Italian wheel manufacturing
business, albeit at a substantial loss. Thereafter, on August 28, 2003, Amcast,
the Prepetition Secured Lenders and the Senior Noteholders executed Amended and
Restated Restructuring Agreements pursuant to which, among other things, Amcast
agreed to use its good faith best efforts to either refinance all of the
indebtedness owed to the Prepetition Secured Lenders and the Noteholders, or
sell substantially all of its assets, on or before September 1, 2004.
In conjunction with the execution of the Amended and Restated
Restructuring Agreement in August, 2003, Amcast, together with its Prepetition
Secured Lenders and Senior Noteholders, entered into an Accommodation Agreement
and an Access and Security Agreement with General Motors Corporation ("GM"),
Amcast's largest customer. Pursuant to these agreements, GM agreed to provide
certain commercial accommodations and credit enhancements in connection with its
dealing with Amcast in return for the lenders' agreement to restructure their
secured debt and to continue to finance Amcast's operations under the terms set
forth in the agreements. Amcast, in turn, agreed to provide GM with a right to
access and operate certain of Amcast's manufacturing plants in the event of a
default which threatened GM's on-going production.
In connection with its efforts to refinance or sell its assets, Amcast
retained the services of W.Y. Campbell & Co., an investment banking firm with
significant expertise in the automotive industry. In addition to its pursuit of
a refinancing or sale, Amcast also instituted numerous cost-cutting initiatives
and implemented significant work-force reductions, in an effort to improve the
Company's financial prospects.
In furtherance of its obligation to either refinance or sell assets and
reduce secured debt, Amcast sold the Elkhart assets and certain other assets
associated with its plumbing business on or about August 2, 2004 for $54.6
million. Although the assets of LBC were offered for sale with the other assets
comprising Amcast's plumbing business, the purchaser elected to exclude LBC's
assets from the transaction due, in large measure, to environmental issues
associated with those assets.
Amcast sold the assets associated with its aluminum components business on
or about August 23, 2004 for $9.5 million. Proceeds realized from both of these
sales were applied to reduce the secured debt owed to the Prepetition Secured
Lenders and Noteholders.
Simultaneously with the marketing of its plumbing business and its
aluminum components business, Amcast directed W.Y. Campbell & Company to
undertake a thorough effort to market the assets associated with its aluminum
wheels business. That effort spanned nearly nine months during which time more
than 75 prospects were contacted. Following extensive discussions and
negotiations with those parties that expressed a serious interest in pursuing a
transaction, the highest offer received for the aluminum wheels business was
substantially less than the amount of debt owed to the Prepetition Secured
Lenders and Senior Noteholders secured by those assets. As a result, Amcast, in
consultation with its lenders, rejected the offer to purchase the aluminum
wheels business.
The measures taken by Amcast to address its financial and operational
problems proved insufficient to restore the Company to profitability. The
Company continued to incur significant
31
losses and was unable to generate sufficient positive cash flow to sustain its
on-going operations. It became apparent that a refinancing of the outstanding
secured debt owed to the Prepetition Secured Lenders and Noteholders would not
be possible other than through a Chapter 11 proceeding. The Company has,
however, reached an agreement in principle with the Prepetition Secured Lenders
and Noteholders on the terms of a financial restructuring to be implemented
through a plan of reorganization under Chapter 11 of the Bankruptcy Code. The
terms are consistent with GM's requirements as set forth in the Accommodation
Agreement executed in August 2003. The agreement for a financial restructuring
was memorialized in a Lockup and Voting Agreement, dated November 29, 2004 (the
"Lockup Agreement") among the Prepetition Secured Lenders and Noteholders and
the Debtors. Pursuant to the terms of the Lockup Agreement, the Prepetition
Secured Lenders and Noteholders have agreed to vote in favor of the Debtors'
Joint Plan of Reorganization and provide DIP Financing and the Exit Facility
necessary to fund the Plan. Based upon the agreement reached with the
Prepetition Secured Lenders and Noteholders, Amcast and its affiliated Debtors
filed petitions for reorganization under Chapter 11 of the Bankruptcy Code on
November 30, 2004, and thereafter filed their Joint Plan of Reorganization.
As of the Petition Date, Amcast and various of the other Debtors were
obligated to the Prepetition Secured Lenders under the Prepetition Secured
Credit Agreement in the approximate principal amount of $67,874,308, plus
accrued interest, fees and costs. In addition, as of the Petition Date, Amcast
and various of the other Debtors were indebted to the Prepetition Secured
Lenders under certain secured Line of Credit Documents in the approximate
principal amount of $9,918,321 plus accrued interest, fees and costs. As of the
Petition Date, Amcast and various of the other Debtors were also obligated to
the Noteholders in the approximate principal amount of $30,558,514 plus accrued
interest, fees and costs.
ARTICLE V
CHAPTER 11 CASE
A. Continuation of Business; Stay of Litigation. The Debtors filed their
petitions for relief under Chapter 11 of the Bankruptcy Code on November 30,
2004. Since the Petition Date, the Debtors have continued to operate as
debtors-in-possession subject to the supervision of the Bankruptcy Court and in
accordance with the Bankruptcy Code. The Debtors are authorized to operate their
businesses and manage their properties in the ordinary course, with transactions
outside of the ordinary course of business requiring Bankruptcy Court approval.
An immediate effect of the filing of the Debtors' bankruptcy petitions was
the imposition of the automatic stay under the Bankruptcy Code which, with
limited exceptions, enjoins the commencement or continuation of all collection
efforts by Creditors, the enforcement of Liens against property of the Debtors
and the continuation of litigation against the Debtors. The relief provides the
Debtors with the "breathing room" necessary to assess and reorganize their
businesses and prevents Creditors from obtaining an unfair recovery advantage
while the reorganization is ongoing.
B. First Day Orders. On the first day of the Chapter 11 Case, the Debtors
filed several applications and motions seeking certain relief by virtue of
so-called "first day orders."
32
First day orders are intended to facilitate the transition between a debtor's
prepetition and postpetition business operations by approving certain regular
business practices that may not be specifically authorized under the Bankruptcy
Code or as to which the Bankruptcy Code requires prior approval by the
Bankruptcy Court. The first day orders obtained in this Chapter 11 Case are
typical of orders entered in other substantial Chapter 11 cases across the
country. Such orders authorized, among other things:
- joint administration of the Debtors' bankruptcy cases;
- interim debtor-in-possession financing and use of cash
collateral (as further discussed below);
- the maintenance of the Debtors' bank accounts and operation of
their cash management systems substantially as such systems
existed prior to the Petition Date;
- payment of employees' prepetition compensation, benefits and
expense reimbursement amounts on an interim basis;
- continuation of workers' compensation and employers' liability
program and policies in payment of certain prepetition
obligations;
- extension of the time for filing schedules and statements of
financial affairs;
- payment of prepetition sales, use, franchise and other taxes;
and
- provision of adequate assurance of payment to utility
companies to avoid discontinuation of utility services.
C. Retention of Professionals. The Debtors are represented in the Chapter
11 Case by Thompson Hine LLP ("Thompson Hine"). The Debtors have been authorized
to obtain financial advisory and restructuring advisory services from Glass &
Associates, Inc., auditing services from Ernst & Young LLP and tax consulting
services from Pricewaterhouse Cooper. Finally, JPMorgan Trust Company, National
Association was authorized to provide claims, noticing and balloting services to
the Debtors. The Debtors have also retained a number of other professional firms
to assist them in the ordinary course of their businesses.
D. Official Appointment of Creditors Committee. On December 15, 2004, the
United States Trustee for the Southern District of Ohio (the "U.S. Trustee")
appointed an official committee of unsecured creditors (the "Creditors
Committee"), pursuant to Section 1102(a) of the Bankruptcy Code. The current
members of the Creditors Committee are: Akzo Nobel, Beck Aluminum Corporation,
D&R Industries, Inc., I. Schumann & Co., LB Mold, Inc., Lacks Wheel Trim
Systems, LLC, Pension Benefit Guarantee Corporation and John H. Shuey. The
Creditors Committee has retained McDonald, Hopkins Co., LPA, as its counsel and
FTI Consulting, Inc. as its financial advisor. The expenses of members of the
Creditors Committee and the fees and
33
expenses of the professionals serving on behalf of the Creditors Committee are
to be paid by the Debtors, subject to approval by the Bankruptcy Court.
E. Authorization to Use Cash Collateral.
1. Cash Collateral of Prepetition Secured Lenders. The cash the
Debtors had on hand as of the Petition Date, and substantially all cash
received by the Debtors during the Chapter 11 Case, to the extent of
perfected liens thereon, constituted "cash collateral" of the Prepetition
Secured Lenders and, in the case of CTC, "cash collateral" of Provident
Bank and the Prepetition Secured Lenders. Cash collateral is defined in
Section 363 of the Bankruptcy Code and includes, but is not limited to,
"cash, negotiable instruments, documents of title, securities, deposit
accounts, . . . other cash equivalents... . and . . . proceeds, products,
... rents or profits of property subject to a security interest. . ." 11
U.S.C. Section 363(a). Under the Bankruptcy Code, the Debtors are
prohibited from using, selling or leasing cash collateral unless either
the appropriate creditor(s) consent or the Bankruptcy Court, after notice
and a hearing, authorizes such action. The Prepetition Secured Lender
Agent, and, in the case of CTC, Provident Bank and the Prepetition Secured
Lender Agent, subject to Bankruptcy Court approval, consented to the
Debtors' use of cash collateral to fund the administration of the Debtors'
and CTC's estates, respectively, and the continued operation of their
businesses, subject to certain conditions set forth in the Interim DIP
Facility and Cash Collateral Order and the Order Authorizing Debtor
Casting Technology Company's Use of Cash Collateral and Provision of
Adequate Protection, each dated December 3, 2004. By final order dated
January 18, 2005, the Debtors obtained authority from the Bankruptcy Court
to use cash collateral for working capital and general corporate purposes
and to pay costs and expenses related to the Chapter 11 Case subject to,
inter alia, a budget (the "Final DIP Facility and Cash Collateral Order
").
F. Postpetition and Postconfirmation Funding.
1. DIP Facility. Recognizing the need to have sources of working
capital and financing available to meet their needs postpetition in
connection with the operation of their businesses, Amcast, as borrower and
its affiliated Debtor entities as guarantors, and Heritage Bank, SSB, a
Texas-chartered savings bank in its capacity as administrative agent (the
"DIP Facility Agent"), certain investment funds (the "Highland Funds")
collaterally managed by Highland Capital Management, L.P. ("Highland"),
and other Persons as "Lenders" (such other "Lenders," together with the
Highland Funds are hereinafter collectively referred to as the "DIP
Facility Lenders"), entered into a $15 million postpetition revolving
credit agreement dated December 15, 2004 (the "DIP Facility"). The
Bankruptcy Court entered the Interim DIP Financing and Cash Collateral
Order on December 3, 2004 authorizing the Debtors' use of cash collateral
and the borrowing of up to $5 million in postpetition financing until the
Final Hearing. Pursuant to the terms of the Final DIP Financing and Cash
Collateral Order and the DIP Credit Agreement, the DIP Lenders were
granted, subject to certain carve-outs, (i) superpriority administrative
expense claims for all loans, advances and other obligations owed by the
Debtors to the DIP Lenders under the DIP Facility, such superpriority
administrative expense claims being accorded priority over all
administrative expense claims and
34
unsecured claims against the Debtors, other than with respect to proceeds
of avoidance actions as to which such superpriority administrative expense
claims attach to such proceeds pari passu with all other administrative
claims, and (ii) perfected postpetition security interests and liens on
all of the assets of the Debtors (other than avoidance actions), such
security interests and liens being accorded priority over all other
prepetition and postpetition liens and security interests, other than
prepetition liens and security interests that were senior to the
prepetition liens and security interests held by the Prepetition Secured
Lenders under the Prepetition Secured Credit Agreement. Funds advanced by
the DIP Facility Lenders were used to meet the Debtors' operating needs
and to satisfy approximately $2,400,000 owed to Provident Bank by CTC
which was secured by a first priority lien and security interest in
substantially all of CTC's assets. Under the terms of the Final DIP
Financing and Cash Collateral Order, the DIP Facility was scheduled to
expire on April 30, 2005, subject to a 45 day extension at the option of
the Debtors upon payment of a $50,000 extension fee. The Debtors have
exercised their option to extend the term of the DIP Facility until June
15, 2005. As of the date of the approval of this Disclosure Statement, the
outstanding balance owed to the DIP Lenders under the DIP Facility was
approximately $_________.
2. Exit Financing. The Plan contemplates, as the principal means for
its implementation, that the Debtors will obtain a post-confirmation
credit facility in the aggregate amount of $89 million (the "Exit
Facility"). The DIP Facility Lenders and their affiliates are the proposed
lenders under the Exit Facility (in such capacity, the "Exit Lenders"). As
further described below, the Exit Facility includes a $20 million unfunded
Revolver (defined below), a $42 million Term Note A and a $27 million Term
Note B.
The proceeds from the Exit Facility will be used to repay the DIP
Facility, and to make other required payments under the Plan, as well as
to provide a source of working capital for the Debtors once they emerge
from Chapter 11. The material terms of the proposed Exit Facility are as
follows:
- BORROWER. Amcast Industrial Corporation
- GUARANTORS. Amcast Automotive of Indiana, Inc., Amcast Casting
Technologies, Inc., Izumi, Inc., Casting Technology Company,
LBC Group Corp., Lee Brass Company
- AMOUNT AND TYPE OF EXIT FACILITY:
REVOLVER: A secured, first priority revolving credit line
(the "REVOLVER") of an aggregate maximum amount
of up to $20 million (hereinafter, the
"REVOLVER COMMITMENT").
TERM LOAN A: A secured, first priority term loan facility in
the aggregate amount of $42 million.
TERM LOAN B: A secured, second priority term loan facility in
35
an aggregate principal amount of $27 million.
- INTENDED USE OF PROCEEDS. The proceeds of the Exit Facility
will be used by the Debtors to fund the Plan and for general
working capital purposes.
- INTEREST. Interest on the Revolver shall be paid monthly,
accruing at a per annum floating rate equal to the sum of (a)
the Libor rate ("LIBOR RATE") published by the Wall Street
Journal plus (b) 3.75%. Interest on the Term Loan A shall be
paid monthly, accruing at a per annum floating rate equal to
the sum of (a) the Libor Rate plus (b) 3.75%.
Interest on the Term Loan B shall accrue at the rate of 12%
per annum (10% as PIK interest and 2% paid in cash on a
quarterly basis). All interest shall be computed on the basis
of a 360-day year for the actual number of days elapsed.
- TERMINATION DATE. The earliest to occur of: (a) with respect
to the Revolver, October 30, 2009; (b) with respect to the
Term Loan A, October 30, 2009; (c) with respect to the Term
Loan B, April 30, 2010; (d) acceleration by Agent and Lenders
of the obligations under the Facility due to the occurrence
and continuation of an Event of Default (as shall be defined
in the Facility); and (e) the date which is the closing date
on any sale of all or substantially all of Borrower's and
Guarantors' assets (the date on which the earliest of clauses
(a) through (e) above occur being referred to hereinafter as
the "TERMINATION DATE"). Upon the Termination Date, all
Commitments shall be deemed terminated, and Lenders shall have
no further obligation to provide financing pursuant to the
Facility.
- COMMITMENT FEE. Fees in connection with the Facility shall be
paid by Borrower as follows: (a) a closing fee of one and
one-half percent (1.50%) of the Revolver Commitment to Agent
for the benefit of Revolver, Term Loan A Lenders and Term Loan
B Lenders on a pro-rata basis in accordance with such Lender's
respective commitment ratio, payable on the Facility closing
date, less any closing fee previously paid to the DIP Lenders
in connection with the DIP Facility, (b) an administrative fee
of $6,500 per month payable in advance of each month to Agent
for its sole benefit; and (c) a success fee of one and
one-half percent (1.50%) of the Revolver Commitment payable to
Highland, payable on the Facility closing date. The fees
described in (a) and (c) above shall be conditions precedent
to the effectiveness of the Facility and shall be charged to
the Revolver.
Borrower also agree to pay Agent, for the benefit of Lenders
in accordance with their respective Revolver Commitment
ratios, an unused line fee equal to the unused Revolver
Commitment multiplied by .75% on a per annum basis, paid
monthly in arrears, on the last day of each month.
36
- SECURITY FOR EXIT FACILITY. Substantially all of Amcast's and
the Guarantors' property.
- INDEMNIFICATION. The Borrower shall indemnify and hold Agent,
Highland and all Lenders and their respective officers,
directors, employees and agents (including all of their
professionals) (each an "INDEMNIFIED PARTY") harmless from and
against any and all claims, damages, losses, liabilities and
expenses (including, without limitation, all fees and
disbursements of attorneys and other professionals) to which
any Indemnified Party may become liable or which may be
incurred by or asserted against any Indemnified Party, except
to the extent the same is found in a final, non-appealable
judgment by a court of competent jurisdiction to have resulted
from such Indemnified Party's gross negligence or willful
misconduct.
- ALTERNATIVE FINANCING. The terms of the Exit Facility will not
limit Amcast's ability to discuss alternative exit financing
plans received on an unsolicited basis from any person if such
discussions are determined in good faith by Amcast to be
necessary to fulfill its fiduciary duties and any such
exercise of such fiduciary duties shall not be deemed to
constitute a breach of the terms of the proposed Exit
Facility.
- APPROVAL OF DISCLOSURE STATEMENT, CONFIRMATION OF PLAN, AND
APPROVAL OF EXIT FACILITY DEFINITIVE DOCUMENTS. The Bankruptcy
Court shall approve the Disclosure Statement by the entry of
one or more orders satisfactory in form and substance to the
Exit Lenders on or before May 31, 2005. The Bankruptcy Court
shall confirm the Plan and the Bankruptcy Court shall approve
the definitive documentation with respect to the Exit Facility
by the entry of one or more orders satisfactory in form and
substance to the Exit Lenders on or before June 30, 2005.
G. Other Material Matters to be Addressed during the Chapter 11 Case. In
addition to developing its Plan of Reorganization, the Debtors have addressed,
or will address, a number of other matters in preparation for emergence from
Chapter 11. Among these matters are the following:
1. Executory Contracts and Unexpired Leases
(a) Disposition of Contracts and Leases. Pursuant to Section
365 of the Bankruptcy Code, the Debtors may choose to assume, assume
and assign or reject executory contracts and unexpired leases of
real and personal property, subject to approval of the Bankruptcy
Court. As a condition to assumption, or assumption and assignment,
unless otherwise agreed by the non-Debtor party, the Debtors must
cure all existing defaults under the contract or lease, and must
provide adequate assurance of future performance of the contract or
lease. If the contract or lease is rejected, any resulting rejection
damages are treated as prepetition unsecured claims. Generally, and
with certain exceptions, postpetition obligations arising under a
contract or lease must be paid in full in the ordinary
37
course of business. The Debtors' Plan provides that each Debtor
shall be deemed to have rejected each executory contract and
unexpired lease to which it is a party unless such contract or lease
(i) was previously assumed or rejected by such Debtor, (ii)
previously expired or terminated pursuant to its own terms, (iii) is
the subject of any pending motion to assume or reject filed by one
of the Debtors on or before the Confirmation Date, or (iv) is listed
on the Schedule of Executory Contracts To Be Assumed by the Debtors,
attached as part of the Plan Supplement.
(b) Extension of Time to Assume or Reject Unexpired Leases.
Given the size and complexity of the Chapter 11 Case, the Debtors
were unable to complete their analysis of all nonresidential real
property leases during the time limitation prescribed by Section
365(d)(4) of the Bankruptcy Code. By order entered on January 7,
2005, the Bankruptcy Court extended the time by which the Debtors
must assume or reject leases of nonresidential property through the
earlier of April 30, 2005 or the Confirmation of the Plan. On April
22, 2005, the Debtors filed a motion with the Bankruptcy Court
asking for a further extension through the date of Confirmation of
the Plan.
2. Pending Litigation and Automatic Stay. From time to time, the
Debtors are involved in litigation. As a result of the commencement of the
Chapter 11 Case, pursuant to Section 362 of the Bankruptcy Code, all
litigation pending against the Debtors has been stayed. Except for those
matters described below, no requests have been made for relief from the
automatic stay.
(a) Motion of Broadspire Services Inc. for relief from the
automatic stay in order to provide a 60 day notice to terminate a
services contract with Amcast's for third-party administration
services.
(b) Motion for Relief From Stay filed by The Methodist
Hospital and Factory Mutual Insurance Company seeking the right to
prosecute a product liability claim alleged to be covered by
insurance.
3. Claims Process. In Chapter 11, claims against a debtor are
established either as a result of being listed in the debtor's schedules
of liabilities or through assertion by the creditor in a timely filed
proof of claim form. Once established, the claims are either allowed or
disallowed. If allowed, the claim will be recognized and treated pursuant
to the plan of reorganization. If disallowed, the creditor will have no
right to obtain any recovery on or to otherwise enforce the claim against
the debtor.
(a) Schedules and Statements. On January 31, 2005, the Debtors
filed their schedules of liabilities (as amended, the "Schedules"),
as well as their schedules of assets and executory contracts and
their statements of financial affairs. The Schedules set forth the
Claims of known Creditors against each of the Debtors as of the
Petition Date, based upon the Debtors' books and records. The
Debtors reserve the right to further amend their Schedules during
the remaining pendency of the Chapter 11 Case.
38
(b) Claims Bar Date. On January 12, 2005, the Debtors filed a
motion with the Bankruptcy Court requesting the establishment of a
Bar Date for filing Proofs of Claim or Proofs of Interest against
the Debtors by those Creditors required to do so. On February 4,
2005, the Court entered a Stipulated Order approving the form of the
Debtors' bar date notice and establishing March 22, 2005 as the bar
date for prepetition claim and interest holders.
In compliance with procedures approved by the Bankruptcy
Court, the Debtors, provided timely notice of the Bar Date by mail.
In addition, the Debtors published notice of the Bar Date in the
national edition of the Wall Street Journal.
On March 21, 2005, the Court entered an additional Stipulated
Order establishing May 31, 2005 as the bar date for filing claims of
governmental units, consistent with the provisions of Section
502(b)(9) of the Bankruptcy Code.
The Debtors have filed an additional motion with the Court
requesting that a supplemental bar date be set for June 13, 2005.
Generally, as set forth in the supplemental bar date motion, such
supplemental bar date would be applicable only to those narrowly
defined parties who did not receive notice of the March 22, 2005 bar
date.
(c) Claims Objection Process. Proofs of Claim aggregating over
1,000 in number have been filed against the Debtors. If the Debtors
do not object to a Proof of Claim by the deadline established in the
Plan, the Claim asserted therein will be deemed Allowed and will be
treated pursuant to the Plan. As appropriate, the Debtors may seek
to negotiate and settle disputes as to Proofs of Claims as an
alternative to filing objections to the Proofs of Claim.
H. Plan Process.
1. Extension of Exclusive Periods. Section 1121(b) of the Bankruptcy
Code provides for an initial period of 120 days after the commencement of
a Chapter 11 case during which a debtor has the exclusive right to propose
a plan of reorganization (the "Exclusivity Period"). In addition, Section
1121(c)(3) of the Bankruptcy Code provides that if a debtor proposes a
plan within the Exclusivity Period, it has the remaining balance of 180
days after the commencement of the Chapter 11 case to solicit acceptances
of such plan (the "Exclusive Solicitation Period"). During the Exclusivity
Period and the Exclusive Solicitation Period, plans may not be proposed by
any party in interest other than the debtor. Under Section 1121(d) of the
Bankruptcy Code, the Exclusivity Period and the Exclusive Solicitation
Period may be extended for cause.
The Debtors filed their Plan of Reorganization on December 16, 2004.
On March 23, 2005, the Bankruptcy Court entered an order establishing
April 30, 2005 as the date by which the Debtors were required to file
their Disclosure Statement and extending the date through which they have
the exclusive right to seek confirmation of their Plan to June 29, 2005.
Thus, the Debtors continue to have the exclusive right to seek
confirmation of their plan of reorganization until June 29, 2005 or such
later date as the
39
Bankruptcy Court may establish upon motion of the Debtors. On April 22,
2005, the Debtors filed a motion with the Bankruptcy Court asking that the
deadline for filing their Disclosure Statement be extended to May 30, 2005
and that the Exclusivity Period and the Exclusive Solicitation Period be
extended for an additional 30 days.
ARTICLE VI
SUMMARY OF THE PLAN OF REORGANIZATION
THIS SECTION PROVIDES A SUMMARY OF THE STRUCTURE AND IMPLEMENTATION OF THE
PLAN AND THE CLASSIFICATION AND TREATMENT OF CLAIMS UNDER THE PLAN AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE PLAN, WHICH ACCOMPANIES THIS
DISCLOSURE STATEMENT, AND TO THE EXHIBITS ATTACHED THERETO.
THE STATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT INCLUDE SUMMARIES OF
THE PROVISIONS CONTAINED IN THE PLAN AND IN DOCUMENTS REFERRED TO THEREIN. THE
STATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT DO NOT PURPORT TO BE PRECISE
OR COMPLETE STATEMENTS OF ALL THE TERMS AND PROVISIONS OF THE PLAN OR DOCUMENTS
REFERRED TO THEREIN, AND REFERENCE IS MADE TO THE PLAN AND TO SUCH DOCUMENTS FOR
THE FULL AND COMPLETE STATEMENTS OF SUCH TERMS AND PROVISIONS.
THE PLAN ITSELF AND THE DOCUMENTS REFERRED TO THEREIN WILL CONTROL THE
TREATMENT OF CLAIMS AGAINST, AND INTERESTS IN, THE DEBTORS UNDER THE PLAN AND
WILL, UPON THE EFFECTIVE DATE, BE BINDING UPON HOLDERS OF CLAIMS AGAINST, OR
INTERESTS IN, THE DEBTORS, THE REORGANIZED DEBTORS AND OTHER PARTIES IN
INTEREST. IN THE EVENT OF ANY CONFLICT BETWEEN THIS DISCLOSURE STATEMENT AND THE
PLAN OR ANY OTHER OPERATIVE DOCUMENT, THE TERMS OF THE PLAN AND/OR SUCH OTHER
OPERATIVE DOCUMENT WILL CONTROL.
A. Overall Structure of the Plan. Chapter 11 is the principal business
reorganization chapter of the Bankruptcy Code. The consummation of a plan of
reorganization is the principal objective of a Chapter 11 case. A plan of
reorganization sets forth the means for satisfying claims against and interests
in a debtor. Confirmation of a plan of reorganization by the Bankruptcy Court
makes the plan binding upon the debtor, any issuer of securities under the plan,
any person acquiring property under the plan and any creditor of or equity
security holder in the debtor, whether or not such creditor or equity security
holder (a) is impaired under or has accepted the plan or (b) receives or retains
any property under the plan. Subject to certain limited exceptions, and other
than as provided in the plan itself or the confirmation order, the confirmation
order discharges the debtor from any debt that arose prior to the date of
confirmation of the plan and substitutes for such debt the obligations specified
under the confirmed plan, and terminates all rights and interests of equity
security holders.
40
The terms of the Debtors' Plan are based upon, among other things, the
Debtors' assessment of their ability to achieve the goals of their business
plan, make the distributions contemplated under the Plan and pay their
continuing obligations in the ordinary course of their businesses. Under the
Plan, Claims against and Interests in the Debtors are divided into Classes
according to their relative seniority and other criteria.
If the Plan is confirmed by the Bankruptcy Court and consummated, (a) the
Claims in certain Classes will be reinstated or modified and receive
distributions equal to the full amount of such Claims, (b) the Claims of certain
other Classes will be modified and receive distributions constituting a partial
recovery on such Claims, and (c) certain Interests will receive no recovery. On
the Effective Date and at certain times thereafter, the Reorganized Debtors will
distribute Cash, securities and other property in respect of certain Classes of
Claims as provided in the Plan. The Classes of Claims against and Interests in
the Debtors created under the Plan, the treatment of those Classes under the
Plan and the securities and other property to be distributed under the Plan are
described below.
B. Joint Treatment. The Plan is a joint plan of reorganization, pursuant
to which, except as otherwise provided in the Plan, (i) all Claims against each
Estate shall be deemed to be Claims against all Estates, any proof of claim
filed against one of the Debtors will be deemed to be a single claim filed
against all Estates, and all duplicate proofs of claim for the same claim filed
against more than one Debtor will be deemed expunged; (ii) except as otherwise
provided in the Plan, no distributions under the Plan will be made on account of
Claims based upon intercompany obligations by and against the Debtors; (iii) all
Claims based upon prepetition unsecured guarantees by one Debtor in favor of the
other Debtor (other than guarantees existing under any assumed executory
contracts or unexpired leases) will be eliminated, and no distributions under
the Plan will be made on account of Claims based upon such guarantees; and (iv)
for purposes of determining the availability of the right of setoff under
Section 553 of the Bankruptcy Code, the Debtors will be treated as one entity so
that, subject to the other provisions of Section 553, prepetition debts due to
any of the Debtors may be set off against the prepetition debts of the other
Debtor. Joint treatment will not merge or otherwise affect the separate legal
existence of each Debtor, other than with respect to distribution rights under
the Plan; joint treatment will have no effect on valid, enforceable and
unavoidable liens, except for liens that secure a Claim that is eliminated by
virtue of such joint treatment and liens against collateral that are
extinguished by virtue of such joint treatment; and joint treatment will not
have the effect of creating a Claim in a class different from the class in which
a Claim would have been placed in the absence of joint treatment. Joint
treatment will not affect the obligation of each of the Debtors, pursuant to
Section 1930 of Title 28 of the United States Code, to pay quarterly fees to the
Office of the United States Trustee until such time as a particular Chapter 11
case is closed, dismissed or converted.
C. Classification and Treatment of Claims and Interests. Section 1122 of
the Bankruptcy Code provides that a plan of reorganization must classify the
claims and interests of a debtor's creditors and equity interest holders. In
accordance with Section 1122 of the Bankruptcy Code, the Plan divides Claims and
Interests into Classes and sets forth the treatment for each Class (other than
Administrative Claims and Priority Tax Claims which, pursuant to Section
1123(a)(1), do not need to be classified). The Debtors also are required, under
Section 1122 of the Bankruptcy Code, to classify Claims against and Interests in
the Debtors into
41
Classes that contain Claims and Interests that are substantially similar to the
other Claims and Interests in such Class.
The Debtors believe that the Plan has classified all Claims and Interests
in compliance with the provisions of Section 1122 of the Bankruptcy Code and
applicable case law, but it is possible that a holder of a Claim or Interest may
challenge the Debtors' classification of Claims and Interests and that the
Bankruptcy Court may find that a different classification is required for the
Plan to be confirmed. In that event, the Debtors intend, to the extent permitted
by the Bankruptcy Code, the Plan and the Bankruptcy Court, to make such
reasonable modifications of the classifications under the Plan to permit
confirmation and to use the Plan acceptances received for purposes of obtaining
the approval of the reconstituted Class or Classes of which each accepting
holder ultimately is deemed to be a member. Any such reclassification could
adversely affect the Class in which such holder initially was a member, or any
other Class under the Plan, by changing the composition of such Class and the
vote required of that Class for approval of the Plan.
The amount of any Impaired Claim that ultimately is allowed by the
Bankruptcy Court may vary from any estimated allowed amount of such Claim and
accordingly the total Claims ultimately allowed by the Bankruptcy Court with
respect to each Impaired Class of Claims may also vary from any estimates
contained herein with respect to the aggregate Claims in any Impaired Class.
The classification of Claims and Interests and the nature of distributions
to members of each Class are summarized below. The Debtors believe that the
consideration, if any, provided under the Plan to holders of Claims and
Interests reflects an appropriate resolution of their Claims and Interests,
taking into account the differing nature and priority of such Claims and
Interests and the fair value of the Debtors' assets. In view of the deemed
rejection by Classes 6, 7 and 8, however, as set forth below, the Debtors will
seek confirmation of the Plan pursuant to the "cramdown" provisions of the
Bankruptcy Code. Specifically, Section 1129(b) of the Bankruptcy Code permits
confirmation of a Chapter 11 plan in certain circumstances even if the plan has
not been accepted by all impaired classes of claims and interests. See Section
X.H. Although the Debtors believe that the Plan can be confirmed under Section
1129(b), there can be no assurance that the Bankruptcy Court will find that the
requirements to do so have been satisfied.
1. Treatment of Unclassified Claims under the Plan.
(a) Administrative Claims. An Administrative Claim is defined
in the Plan as a Claim for payment of an administrative expense of a
kind specified in Section 503(b) or 1114(e)(2) of the Bankruptcy
Code and entitled to priority pursuant to Section 507(a)(1) of the
Bankruptcy Code, including, but not limited to, (a) the actual,
necessary costs and expenses incurred after the Petition Date of
preserving the Estates and operating the businesses of the Debtors,
including wages, salaries, bonuses or commissions for services
rendered after the commencement of the Chapter 11 Case, (b)
Professional Fee Claims, (c) all fees and charges assessed against
the Estates under 28 U.S.C. Section 1930, (d) all Allowed Claims for
reclamation under Section 546(c)(2)(A) of the Bankruptcy Code, (e)
42
Cure payments for executory contracts and unexpired leases that are
assumed under Section 365 of the Bankruptcy Code, and (f) DIP
Facility Claims. The Debtors have estimated that the amount of
Allowed Administrative Claims payable as of the Effective Date of
the Plan will be $17,443,000, including ordinary course operational
expenses, Professional Fee Claims, fees payable under 28 U.S.C.
Section 1930, reclamation Claims, and Cure costs. Through April 22,
2005, the Debtors have paid $2,669,647 in fees of professionals
retained by the Debtors, the DIP Facility Lenders, Prepetition
Secured Lenders and the Committee.
All fees payable pursuant to Section 1930 of Title 28 of the
United States Code, as determined by the Bankruptcy Court at the
Confirmation Hearing, will be paid on or before the Effective Date.
All such fees that arise after the Effective Date but before the
closing of the Chapter 11 Case will be paid by the Reorganized
Debtors.
All requests for payment of an Administrative Claim (other
than as set forth in Sections 4.1(a), 12.1 and 12.2 of the Plan)
must be filed with the Bankruptcy Court and served on counsel for
the Debtors no later than forty-five (45) days after the Effective
Date. Unless the Debtors object to an Administrative Claim within
sixty (60) days after receipt, such Administrative Claim will be
deemed Allowed in the amount requested. In the event that the
Debtors object to an Administrative Claim, the Bankruptcy Court will
determine the Allowed amount of such Administrative Claim.
Notwithstanding the foregoing, no request for payment of an
Administrative Claim need be filed with respect to an Administrative
Claim which is paid or payable by a Debtor in the ordinary course of
business.
All final requests for payment of Professional Fee Claims
pursuant to Sections 327, 328, 330, 331, 503(b) or 1103 of the
Bankruptcy Code must be filed and served on the Reorganized Debtors,
their counsel and other necessary parties-in-interest no later than
sixty (60) days after the Effective Date, unless otherwise ordered
by the Bankruptcy Court. Objections to such requests for payment
must be filed and served on the Reorganized Debtors, their counsel,
and the requesting Professional or other entity no later than twenty
(20) days (or such longer period as may be allowed by order of the
Bankruptcy Court) after the date on which the applicable request for
payment was served.
The Reorganized Debtors may, without application to or
approval by the Bankruptcy Court, pay reasonable professional fees
and expenses in connection with services rendered to it after the
Effective Date.
Under the Plan, except as otherwise provided for therein, and
subject to the requirements of Sections 12.1 through 12.3 of the
Plan, on, or as soon as reasonably practicable after, the latest of
(i) the Effective Date, (ii) the date such Administrative Claim
becomes an Allowed Administrative Claim, or (iii) the date such
Administrative Claim becomes payable pursuant to any agreement
between a
43
Debtor and the holder of such Administrative Claim, the holder of
each such Allowed Administrative Claim will receive in full
satisfaction, settlement, release and discharge of and in exchange
for such Allowed Administrative Claim, (A) Cash equal to the unpaid
portion of such Allowed Administrative Claim or (B) such other
different treatment as to which the applicable Debtor and such
holder will have agreed upon in writing; provided, however, that
Allowed Administrative Claims with respect to liabilities incurred
by a Debtor in the ordinary course of business during the Chapter 11
Case will be paid in the ordinary course of business in accordance
with the terms and conditions of any agreements relating thereto.
Pursuant to the Plan, the DIP Facility Claims will be deemed
Allowed in their entirety for all purposes of the Plan and the
Chapter 11 Case. Each holder of an Allowed DIP Facility Claim will
receive, on the later of the Effective Date or the date on which
such DIP Facility Claim becomes payable pursuant to any agreement
between the Debtors and the holder of such DIP Facility Claim, in
full satisfaction, settlement, release and discharge of and in
exchange for such Allowed DIP Facility Claim, (i) Cash equal to the
full amount of such Allowed DIP Facility Claim, or (ii) such
different treatment as to which the Debtors and such holder will
have agreed upon in writing.
Pursuant to the Plan, Adequate Protection Claims held by any
of the Debtors' Prepetition Secured Lenders will be deemed satisfied
in full by payments made pursuant to the Final DIP Facility and Cash
Collateral Order. Any replacement or other Liens created under the
DIP Facility will terminate and will have no further force and
effect as of the Effective Date, so long as all payments required to
be made under the Amcast DIP Facility have been made.
(b) Priority Tax Claims. The Plan defines Priority Tax Claims
as Claims that are entitled to priority pursuant to Section
507(a)(8) of the Bankruptcy Code. Such Claims include Claims of
governmental units for taxes owed by the Debtors that are entitled
to a certain priority in payment pursuant to Section 507(a)(8) of
the Bankruptcy Code. The taxes entitled to priority are (i) taxes on
income or gross receipts that meet the requirements set forth in
Section 507(a)(8)(A) of the Bankruptcy Code, (ii) property taxes
meeting the requirements of Section 507(a)(8)(B) of the Bankruptcy
Code, (iii) taxes that were required to be collected or withheld by
the Debtors and for which the Debtors are liable in any capacity as
described in Section 507(a)(8)(C) of the Bankruptcy Code, (iv)
employment taxes on wages, salaries or commissions that are entitled
to priority under Section 507(a)(3) of the Bankruptcy Code, to the
extent that such taxes meet the requirements of Section
507(a)(8)(D), (v) excise taxes of the kind specified in Section
507(a)(8)(E) of the Bankruptcy Code, (vi) customs duties arising out
of the importation of merchandise that meet the requirements of
Section 507(a)(8)(F) of the Bankruptcy Code, and (vii) prepetition
penalties relating to any of the foregoing taxes to the extent such
penalties are in compensation for actual pecuniary loss as provided
in Section 507(a)(8)(G) of the
44
Bankruptcy Code. The Debtors have estimated that the aggregate
amount of Allowed Priority Tax Claims payable under the Plan will be
$792,194.
Under the Plan, each holder of an Allowed Priority Tax Claim
will receive in full satisfaction, settlement, release and discharge
of and in exchange for such Allowed Priority Tax Claim, (i) on, or
as soon as reasonably practicable after, the later of the Effective
Date or the date on which such Claim becomes an Allowed Claim, Cash
equal to the unpaid portion of such Allowed Priority Tax Claim, (ii)
such other different treatment as to which the applicable Debtor and
such holder will have agreed upon in writing, or (iii) at the
Reorganized Debtors' sole discretion, deferred Cash payments having
a value, as of the Effective Date, equal to such Allowed Priority
Tax Claim, over a period not exceeding six (6) years after the date
of assessment of such Allowed Priority Tax Claim; provided, however,
that the Reorganized Debtors shall have the right to pay any Allowed
Priority Tax Claim, or the remaining balance of any Allowed Priority
Tax Claim, in full at any time on or after the Effective Date,
without premium or penalty. Should the debtors elect to pay the
Allowed Priority Tax Claim over a period not exceeding six (6)
years, payments shall be made in equal quarterly installments of
principal, plus simple interest accruing from the Effective Date at
six percent (6%) per annum on the unpaid portion of such claim.
2. Treatment of Classified Claims and Interests under the Plan.
(a) Class 1, Other Priority Claims. Under the Plan, Other
Priority Claims are defined as Claims against the Debtors entitled
to priority pursuant to Section 507(a) of the Bankruptcy Code, other
than a Priority Tax Claim or an Administrative Claim.
The Plan provides that, on, or as soon as reasonably
practicable after, the latest of (i) the Effective Date, (ii) the
date on which such Other Priority Claim becomes an Allowed Other
Priority Claim, or (iii) the date on which such Other Priority Claim
becomes payable pursuant to any agreement between a Debtor and the
holder of such Other Priority Claim, each holder of an Allowed Other
Priority Claim will receive, in full satisfaction, settlement,
release and discharge of and in exchange for such Allowed Other
Priority Claim, either (A) Cash equal to the unpaid portion of such
Allowed Other Priority Claim or (B) such other different treatment
as to which the applicable Debtor and such holder will have agreed
upon in writing.
(b) Class 2, Prepetition Secured Lender Claims. Under the
Plan, the Prepetition Secured Lender Claims means any Secured Claim
arising under the Prepetition Secured Credit Agreement, the Line of
Credit Documents, the Northwestern Note Agreement and the Principal
Note Agreement (collectively, the "Prepetition Transaction
Documents") as of the Petition Date.
In full satisfaction of the Prepetition Secured Claims under
the Prepetition Transaction Documents, the Prepetition Secured
Lenders shall receive:
45
(i) their pro rata share of Term Note A in the aggregate
principal amount of $42 million, minus the funded amount of the DIP
Facility on the Effective Date, with the payment and lien
priorities, terms and conditions set forth in the Term Note A
Agreement;
(ii) their pro rata share of Term Note B in the aggregate
principal amount of $27 million, with the payment and lien
priorities, terms and conditions set forth in the Term Note B
Agreement; and
(iii) their pro rata share of 100% of the New Amcast Common
Stock issued as of the Effective Date (as Amcast Interests will be
cancelled pursuant to Section 4.4 of the Plan).
The pro rata interests of the Prepetition Secured Lenders in
the New Amcast Common Stock, Term Note A and Term Note B shall be
traded as a "unit" as set forth in the New Shareholders' Agreement
in the form attached to the Plan Supplement. The Amended and
Restated Certificate of Incorporation of Reorganized Amcast (the
"Amended Certificate") will provide that, as of the Effective Date,
Reorganized Amcast will be authorized to issue 1,000 shares of New
Amcast Common Stock, par value $.01 per share. Reorganized Amcast
will issue 1,000 shares of New Common Stock to holders of a Claim in
Class 2, which will represent 100% of the outstanding common stock
of Reorganized Amcast. In addition to the New Amcast Common Stock to
be issued pursuant to the Plan, Reorganized Amcast also will be
authorized to issue additional shares of New Common Stock from time
to time following the Effective Date, under the provisions of the
Amended Certificate, the Amended By-Laws of Reorganized Amcast (the
"Amended By-Laws") and applicable law.
Shares of the New Common Stock to be issued pursuant to the
Plan will be subject to the terms of the New Shareholders'
Agreement. Under this agreement, holders of the New Common Stock
(and their transferees), whether such New Common Stock is issued in
connection with the Plan or otherwise, will be subject to the
provisions that impose material limitations on their ability to,
among other things, transfer such New Common Stock. The Prepetition
Secured Lenders shall receive the distributions provided for in
Section 4.3 of the Plan in full satisfaction, settlement, release,
and discharge of and exchange for all Secured Claims arising under
the Prepetition Transaction Documents.
Each holder of a Claim in Class 2 that affirmatively votes in
favor of the Plan will be deemed to forever release, waive and
discharge all claims, obligations, suits, judgments, damages,
demands, debts, rights, causes of action, and liabilities whatsoever
against (i) the Debtors' non-Debtor subsidiaries, (ii) the Creditors
Committee (but not its members in their individual capacities),
their respective present agents or professionals, and (iii) any of
the directors, officers and employees of the Debtors serving
immediately prior to the Effective Date, those of Debtors'
directors, officers and employees designated on Exhibit C of the
Plan, and any of the Debtors' present agents or professionals
(including any
46
professionals retained by the Debtors) in connection with or related
to the Debtors, the Chapter 11 Case, or the Plan (other than the
rights under the Plan and the contracts, instruments, releases,
indentures and other agreements or documents delivered thereunder),
whether liquidated or unliquidated, fixed or contingent, matured or
unmatured, known or unknown, foreseen or unforeseen, then existing
or thereunder arising, in law, equity, or otherwise, that are based
in whole or part on any act, omission, transaction, event or other
occurrence taking place on or prior to the Effective Date in any way
relating to the Debtors or the Reorganized Debtors, the Chapter 11
Case, or the Plan. Each of the Claimholder Releasees (defined below)
will be deemed to forever release, waive and discharge any claims,
obligations, suits, judgments, damages, demands, debts, rights,
causes of action and liabilities whatsoever taking place on or prior
to the Effective Date in any way relating to the Debtors or the
Reorganized Debtors, the Chapter 11 Case, or the Plan, against each
holder of a Claim that affirmatively votes in favor of the Plan.
(c) Class 3, Other Secured Claims. Under the Plan, Other
Secured Claims means a Secured Claim arising prior to the Petition
Date against any of the Debtors, other than a Prepetition Secured
Lender Claim. A Secured Claim is a Claim that is secured by a Lien
which is not subject to avoidance under the Bankruptcy Code or
otherwise invalid under the Bankruptcy Code or applicable state law,
on property in which an Estate has an interest, or a Claim that is
subject to setoff under Section 553 of the Bankruptcy Code. The
amount of a Secured Claim is equal to the value of the Claim
holder's interest in the Estate's interest in such property or in
the case of a Claim subject to setoff, the amount subject to setoff;
as determined by a Final Order pursuant to Section 506(a) of the
Bankruptcy Code, or in the case of setoff, pursuant to Section 553
of the Bankruptcy Code, or in either case as otherwise agreed upon
in writing by the Debtors or the Reorganized Debtors and the holder
of such Claim. Claims secured by valid mechanic's liens would be
considered Other Secured Claims under the Plan. The Debtors estimate
that Other Secured Claims will be Allowed in the aggregate amount of
$0.
The Plan provides for alternative treatments of Other Secured
Claims, at the option of the Reorganized Debtors, depending upon the
nature and amount of the Other Secured Claim, as follows:
- First, the Reorganized Debtors may elect that the legal,
equitable and contractual rights of a holder of an
Allowed Other Secured Claim be "Reinstated." As used in
the Plan, the term "Reinstated" means (a) leaving
unaltered the legal, equitable and contractual rights to
which the holder of a Claim is entitled so as to leave
such Claim unimpaired in accordance with Section 1124 of
the Bankruptcy Code, or (b) notwithstanding any
contractual provision or applicable law that entitles
the holder of such Claim to demand or receive
accelerated payment of such Claim after the occurrence
of a default, (i) curing any such default that occurred
before or
47
after the Petition Date, other than a default of a kind
specified in Section 365(b)(2) of the Bankruptcy Code,
(ii) reinstating the maturity of such Claim as such
maturity existed before such default, (iii) compensating
the holder of such Claim for any damages incurred as a
result of any reasonable reliance by such holder on such
contractual provision or such applicable law, and (iv)
not otherwise altering the legal, equitable or
contractual rights to which the holder of such Claim is
entitled; provided, however, that any contractual right
that does not pertain to the payment when due of
principal and interest on the obligation on which such
Claim is based, including, but not limited to, financial
covenant ratios, negative pledge covenants, covenants or
restrictions on merger or consolidation, covenants
regarding corporate existence, or covenants prohibiting
certain transactions or actions contemplated by the Plan
or conditioning such transactions or actions on certain
factors, will not be required to be reinstated in order
for a Claim to be considered Reinstated.
- Second, the Reorganized Debtors may elect that a holder
of an Allowed Other Secured Claim retain the liens
securing such Allowed Other Secured Claim and receive
deferred Cash payments totaling at least the amount of
such Allowed Other Secured Claim, of a value, as of the
Effective Date, of at least the value of such holder's
interest in the Estate's interest in such property.
- Third, the Reorganized Debtors may elect that the
collateral securing such Allowed Other Secured Claim be
surrendered to the holder of such Allowed Other Secured
Claim.
- A final option is that a holder of an Allowed Other
Secured Claim be paid in full on the Effective Date.
The Debtors' failure to object to any Other Secured Claim in
the Chapter 11 Case will be without prejudice to the Debtors' or the
Reorganized Debtors' right to contest or otherwise defend against
such Claim in the appropriate forum when and if such Claim is sought
to be enforced by the Other Secured Claim holder. Notwithstanding
Section 1141(c) or any other provision of the Bankruptcy Code, all
prepetition Liens on property of any Debtor held with respect to
Other Secured Claims will survive the Effective Date and continue in
accordance with the contractual terms of the underlying agreements
governing such Claim until such Allowed Claim is paid in full.
Nothing in the Plan will preclude the Debtors or the Reorganized
Debtors from challenging the validity of any alleged Lien on any
asset of a Debtor or the value of the property that secures any
alleged Lien.
If the Debtors elect the first or second treatment options
described above, which do not result in full satisfaction of an
Allowed Other Secured Claim on an
48
immediate basis, the liens securing the Allowed Other Secured Claim
will continue in effect until the Claim is satisfied in full.
Each holder of a Claim in Class 3 that affirmatively votes in
favor of the Plan will be deemed to forever release, waive and
discharge all claims, obligations, suits, judgments, damages,
demands, debts, rights, causes of action, and liabilities whatsoever
against (i) the Debtors' non-Debtor subsidiaries, (ii) the
Prepetition Secured Lenders, the Prepetition Secured Lender Agent,
the Creditors Committee (but not its members in their individual
capacities), their respective present agents or professionals, and
(iii) any of the directors, officers and employees of the Debtors
serving immediately prior to the Effective Date, those of Debtors'
directors, officers and employees designated on Exhibit C of the
Plan, and any of the Debtors' present agents or professionals
(including any professionals retained by the Debtors) in connection
with or related to the Debtors, the Chapter 11 Case, or the Plan
(other than the rights under the Plan and the contracts,
instruments, releases, indentures and other agreements or documents
delivered thereunder), whether liquidated or unliquidated, fixed or
contingent, matured or unmatured, known or unknown, foreseen or
unforeseen, then existing or thereunder arising, in law, equity, or
otherwise, that are based in whole or part on any act, omission,
transaction, event or other occurrence taking place on or prior to
the Effective Date in any way relating to the Debtors or the
Reorganized Debtors, the Chapter 11 Case, or the Plan. Each of the
Claimholder Releasees will be deemed to forever release, waive and
discharge any claims, obligations, suits, judgments, damages,
demands, debts, rights, causes of action and liabilities whatsoever
taking place on or prior to the Effective Date in any way relating
to the Debtors or the Reorganized Debtors, the Chapter 11 Case, or
the Plan, against each holder of a Claim that affirmatively votes in
favor of the Plan.
(d) Subclass (3)(i), Mechanic's Lien Secured Claims. Subclass
3(i) consists of Secured Claims of certain creditors who have filed
and perfected mechanic's liens that are not subject to avoidance in
accordance with the provisions of Section 546(b) of the Bankruptcy
Code.
The Plan provides that holders of Mechanic's Lien Secured
Claims will, at the option of the Reorganized Debtors, receive the
same treatment specified above for Other Secured Claims in Class 3.
(e) Class 4, Key Continuing Vendor Claims. Under the Plan,
Class 4 consists of Key Continuing Vendor Claims, which are Claims
of those Persons that the Debtors designated as Critical Vendors
pursuant to the Critical Vendor Order.
Under the Plan, each Allowed Key Continuing Vendor Claim will be
Allowed in the amount set forth and paid in accordance with the
terms of the Trade Agreement executed between the Debtors and the
Critical Vendor in accordance with the terms of the Critical Vendor
Order.
49
Payments scheduled to be made by the Debtors pursuant to the Trade
Agreement and Critical Vendor Order shall continue to be made by the
Reorganized Debtors following the Effective Date. Any other
unsecured Claim that is, or otherwise could have been, asserted by
the holder of such Key Continuing Vendor Claim will be disallowed.
Each holder of a Claim in Class 4 that affirmatively votes in
favor of the Plan will be deemed to forever release, waive and
discharge all claims, obligations, suits, judgments, damages,
demands, debts, rights, causes of action, and liabilities whatsoever
against (i) the Debtors' non-Debtor subsidiaries, (ii) the
Prepetition Secured Lenders, the Prepetition Secured Lender Agent,
the Creditors Committee (but not its members in their individual
capacities), and their respective present agents or professionals,
and (iii) any of the directors, officers and employees of the
Debtors serving immediately prior to the Effective Date, those of
Debtors' directors, officers and employees designated on Exhibit C
of the Plan, and any of the Debtors' present agents or professionals
(including any professionals retained by the Debtors) in connection
with or related to the Debtors, the Chapter 11 Case, or the Plan
(other than the rights under the Plan and the contracts,
instruments, releases, indentures and other agreements or documents
delivered thereunder), whether liquidated or unliquidated, fixed or
contingent, matured or unmatured, known or unknown, foreseen or
unforeseen, then existing or thereunder arising, in law, equity or
otherwise, that are based in whole or part on any act, omission,
transaction, event or other occurrence taking place on or prior to
the Effective Date in any way relating to the Debtors or the
Reorganized Debtors, the Chapter 11 Case, or the Plan. Each of the
Claimholder Releasees will be deemed to forever release, waive and
discharge any such claims, obligations, suits, judgments, damages,
demands, debts, rights, causes of action, and liabilities whatsoever
taking place on or prior to the Effective Date in any way relating
to the Debtors or the Reorganized Debtors, the Chapter 11 Case, or
the Plan, against each holder of a Claim that affirmatively votes in
favor of the Plan.
(f) Class 5, General Unsecured Claims. Under the Plan, General
Unsecured Claim means a Claim against any of the Debtors that is not
a Secured Claim, an Administrative Claim, a Priority Tax Claim,
Other Priority Claim, Key Continuing Vendor Claim, Intercompany
Claim, or Non-Compensatory Damages Claim. In full satisfaction,
settlement, release and discharge of General Unsecured Claims, the
sum of $1,000,000 shall be placed in the Unsecured Claims Reserve
for distribution on Allowed General Unsecured Claims, other than and
exclusive of amounts paid to Key Continuing Vendors or amounts paid
related to cure costs incurred pursuant to the assumption of an
executory contract. Out of such reserved funds, each holder of an
Allowed General Unsecured Claim shall receive in full satisfaction,
settlement, release, and discharge of and in exchange for such
Allowed Claim a lump sum cash payment on the Distribution Date, as
described in Section 8.9(b) of the Plan, in an amount equal to its
pro rata share of the Unsecured Claims Reserve.
50
Distributions to holders of Allowed General Unsecured Claims
are conditioned on the making of appropriate withholding tax and
reporting arrangements as provided in Section 8.10 of the Plan.
Each holder of a Claim in Class 5 that affirmatively votes in
favor of the Plan will be deemed to forever release, waive and
discharge all claims, obligations, suits, judgments, damages,
demands, debts, rights, causes of action, and liabilities whatsoever
against (i) the Debtors' non-Debtor subsidiaries, (ii) the
Prepetition Secured Lenders, the Prepetition Secured Lender Agent,
the Creditors Committee (but not its members in their individual
capacities), and their respective present agents or professionals,
and (iii) any of the directors, officers and employees of the
Debtors serving immediately prior to the Effective Date, those of
Debtors' directors, officers and employees designated on Exhibit C
of the Plan, and any of the Debtors' present agents or professionals
(including any professionals retained by the Debtors) in connection
with or related to the Debtors, the Chapter 11 Case, or the Plan
(other than the rights under the Plan and the contracts,
instruments, releases, indentures and other agreements or documents
delivered thereunder), whether liquidated or unliquidated, fixed or
contingent, matured or unmatured, known or unknown, foreseen or
unforeseen, then existing or thereunder arising, in law, equity or
otherwise, that are based in whole or part on any act, omission,
transaction, event or other occurrence taking place on or prior to
the Effective Date in any way relating to the Debtors or the
Reorganized Debtors, the Chapter 11 Case, or the Plan. Each of the
Claimholder Releasees will be deemed to forever release, waive and
discharge any such claims, obligations, suits, judgments, damages,
demands, debts, rights, causes of action, and liabilities whatsoever
taking place on or prior to the Effective Date in any way relating
to the Debtors or the Reorganized Debtors, the Chapter 11 Case, or
the Plan, against each holder of a Claim that affirmatively votes in
favor of the Plan.
(g) Class 6, Intercompany Claims. Under the Plan, an
Intercompany Claim is any Claim, arising prior to the Petition Date
against any of the Debtors by one of the other Debtors or by a
non-Debtor subsidiary or affiliate of a Debtor, but only to the
extent that such affiliate is a direct or indirect subsidiary of one
of the Debtors.
Subject to the Restructuring Transactions as set forth in
Section 6.3 of the Plan and except as otherwise provided in the
Plan, no holder of an Intercompany Claim will receive or retain any
property of the Debtors under the Plan on account of such Claim.
(h) Class 7, Non-Compensatory Damages Claims. Under the Plan,
a Non-Compensatory Damages Claim is any Claim against any of the
Debtors for any fine, penalty, or forfeiture, or multiple,
exemplary, or punitive damages, to the extent that such fine,
penalty, forfeiture or damage is not compensation for actual
pecuniary loss suffered by the holder of such Claim, including any
such claim based upon, arising from, or relating to any cause of
action whatsoever
51
(including, without limitation, violation of law, personal injury,
or wrongful death, whether secured or unsecured, liquidated or
unliquidated, fixed or contingent, matured or unmatured, known or
unknown, foreseen or unforeseen, then existing or thereafter arising
in law, equity or otherwise).
According to the Plan, the holders of Non-Compensatory Damages
Claims will not receive or retain any property under the Plan on
account of such Claims. All Non-Compensatory Damages Claims will be
discharged as of the Effective Date.
(i) Class 8, Amcast Interests. Amcast Interests consist of all
equity interests in Amcast, including, without limitation, the Old
Amcast Common Stock, the Old Amcast Stock Warrants, together with
any warrants, conversion rights, rights of first refusal, causes of
action, or other rights, contractual or otherwise, to acquire or
receive any stock or other equity ownership interests in Amcast or
any of its Debtor affiliates, and any contracts, subscriptions,
commitments, or agreements pursuant to which a party was or could
have been entitled to receive shares, securities, or other ownership
interests in Amcast or any of its Debtor affiliates as of the
Petition Date.
Under the Plan, all Amcast Interests of any kind will be
cancelled as of the Effective Date and the holders thereof will not
receive or retain any property under the Plan on account of such
Interests.
D. Reservation of Rights Regarding Claims. Except as otherwise explicitly
provided in the Plan, nothing will affect the Debtors' or the Reorganized
Debtors' rights and defenses, both legal and equitable, with respect to any
Claims, including, but not limited to, all rights with respect to legal and
equitable defenses to alleged rights of setoff or recoupment.
E. Allowed Claims, Distribution Rights and Objections to Claims.
1. Allowance Requirement. Only holders of Allowed Claims are
entitled to receive distributions under the Plan. An Allowed
Administrative Claim is a Claim or any portion thereof that has been
allowed, or adjudicated in favor of the holder by estimation or
liquidation, by a Final Order, that was incurred by the Debtors in the
ordinary course of business during the Chapter 11 Case and as to which
there is no dispute as to the Debtors' liability, or that has become
allowed by failure to object pursuant to Section 9.1 of the Plan. An
Allowed Claim is such Claim or any portion thereof (other than an
Administrative Claim) (a) that has been allowed, or adjudicated in favor
of the holder by estimation or liquidation, by a Final Order, or (b) as to
which (i) no Proof of Claim has been filed with the Bankruptcy Court and
(ii) the liquidated and noncontingent amount of which is included in the
Schedules, other than a Claim that is included in the Schedules at zero,
in an unknown amount, or as Disputed, or (c) for which a Proof of Claim in
a liquidated amount has been timely filed with the Bankruptcy Court
pursuant to the Bankruptcy Code, any Final Order of the Bankruptcy Court,
or other applicable bankruptcy law, and as to which either (i) no
objection to its allowance has been filed within the periods of limitation
fixed by the Plan, the Bankruptcy Code, or any order of
52
the Bankruptcy Court, and no objection or dispute as to such claim is set
forth in the Plan, or (ii) any objection to its allowance has been settled
or withdrawn, or has been denied by a Final Order, or (d) that is
expressly allowed in a liquidated amount in the Plan.
2. Date of Distribution. All Distributions to holders of Allowed
Claims as of the applicable Distribution Date will be made on or as soon
as practicable after the applicable Distribution Date, provided, however,
that Distributions to holders of Key Continuing Vendor Claims shall be
made as provided in Section 4.3(c) of the Plan..
For any Claim other than a General Unsecured Claim or Key Continuing
Vendor Claim, the Distribution Date is either (a) on or as soon as
practicable after the Effective Date, but no later than the first (1st)
Business Day that is thirty (30) days after the Effective Date, if the
Claim is an Allowed Claim on the Effective Date or (b) fifteen (15)
calendar days after the last day of the month during which the Claim
becomes an Allowed Claim, if the Claim is not an Allowed Claim on the
Effective Date.
3. Distribution Date for General Unsecured Claims. The amount of
distributions to be made on the Effective Date (subject to Section 8.9(b)
of the Plan) to holders of Allowed Claims in Class 5 on account of such
Claims will be made from the Unsecured Claims Reserve and will be
calculated as if each Disputed Claim in Class 5 were an Allowed Claim in
its Face amount. No later than each Quarterly Distribution Date,
distributions also will be made to holders of Disputed Claims in Class 5
that were allowed during the preceding calendar quarter. Such quarterly
distributions also will be calculated pursuant to the provisions set forth
in this paragraph.
As set forth in Section 8.9(b)(ii) of the Plan, no later than each
Quarterly Distribution Date, each holder of a Claim previously allowed in
Class 5 will receive an additional distribution from the Unsecured Claims
Reserve on account of such Claim in an amount equal to: (a) the amount of
Cash that such holder would have been entitled to receive if such Claim
had become an Allowed Claim on the applicable Quarterly Distribution Date
minus (b) the aggregate amount of Cash previously distributed on account
of such Claim. Each such additional distribution also will include, on the
basis of the amount then being distributed a Pro Rata share of the related
Cash Investment Yield from the investment of any cash in the Unsecured
Claims Reserve, from the date such Cash was deposited into the Unsecured
Claims Reserve to the date that such distribution is made.
4. Making of Distributions. Reorganized Amcast will, in its sole
discretion, designate the Person to serve as the Disbursing Agent under
the Plan, and will file a written notice of such designation at least five
(5) days before the Confirmation Hearing. Distributions to holders of
Allowed Claims will be made by the Disbursing Agent (a) at the addresses
set forth on the Proofs of Claim filed by such holders (or at the last
known addresses of such holders if no Proof of Claim is filed or if the
Debtors have been notified of a change of address), (b) at the addresses
set forth in any written notices of address changes delivered to the
Disbursing Agent after the date of any related Proof of Claim, (c) at the
addresses reflected in the Schedules if no Proof of Claim has been filed
and the Disbursing Agent has not received a written notice of a change of
address, and
53
(d) in the case of an Prepetition Secured Lender Claim, to the Prepetition
Secured Lender Agent. Distributions on account of Prepetition Secured
Lender Claims will be deemed complete upon delivery of such distributions
to the Prepetition Secured Lender Agent. If any holder's distribution is
returned as undeliverable, no further distributions to such holder will be
made unless and until the Disbursing Agent is notified of such holder's
then current address, at which time all missed distributions will be made
to such holder without interest. Unless otherwise agreed between the
Reorganized Debtors and the Disbursing Agent, amounts in respect of
undeliverable distributions made by the Disbursing Agent will be returned
to the Reorganized Debtors until such distributions are claimed.
All claims for undeliverable distributions must be made on or before
the second (2nd) anniversary of the Distribution Date, after which date
all unclaimed property will revert to the Reorganized Debtors free of any
restrictions thereon and the claims of any holder or successor to such
holder with respect to such property will be discharged and forever
barred, notwithstanding any federal or state escheat laws to the contrary.
In the event of a timely claim for an unclaimed distribution, the
Reorganized Debtors will deliver the applicable unclaimed property to the
Disbursing Agent for distribution pursuant to the Plan. Nothing contained
in the Plan will require any Debtor, any Reorganized Debtor, any
Disbursing Agent, to attempt to locate any holder of an Allowed Claim.
5. Reserves for Disputed Claims; Distributions on Account Thereof.
No payments or distributions will be made on account of a Disputed Claim
or any portion thereof until such Claim becomes an Allowed Claim. A
Disputed Claim is any Claim, other than a Claim that has been Allowed
pursuant to the Plan or a Final Order of the Bankruptcy Court, and (a) if
no Proof of Claim has been filed or deemed to have been filed by the
applicable Bar Date, that has been or hereafter is listed on the Schedules
as unliquidated, contingent, or disputed, (b) if a Proof of Claim has been
filed or deemed to have been filed by the applicable Bar Date, as to which
a Debtor has timely filed an objection or request for estimation in
accordance with the Plan, the Bankruptcy Code, the Bankruptcy Rules, and
any orders of the Bankruptcy Court or which is otherwise disputed by a
Debtor in accordance with applicable law, which objection, request for
estimation, or dispute has not been withdrawn or determined by a Final
Order, (c) for which a Proof of Claim was required to be filed by the
Bankruptcy Code, the Bankruptcy Rules, or an order of the Bankruptcy
Court, but as to which a Proof of Claim was not timely or properly filed,
(d) for damages based upon the rejection by the Debtors of an executory
contract or unexpired lease under Section 365 of the Bankruptcy Code and
as to which the applicable Bar Date has not passed, (e) that is disputed
in accordance with the provisions of the Plan; or (f) if not otherwise
Allowed, as to which the applicable Claims Objection Deadline has not
expired.
The Disbursing Agent will, on the applicable Distribution Date, make
distributions on account of any Disputed Claim that has become an Allowed
Claim. Such distributions will be made pursuant to the provisions of the
Plan governing the applicable Class. Such distributions will be based upon
the cumulative distributions that would have
54
been made to the holder of such Claim under the Plan if the Disputed Claim
had been an Allowed Claim on the Effective Date in the amount ultimately
Allowed.
6. Objection Procedures. All objections to Claims must be filed with
the Bankruptcy Court by the Claims Objection Deadline and promptly served
on the holders of such Claims. Under the Plan, the Claims Objection
Deadline is defined as the last day for filing objections to Claims, which
day will be (a) for all Claims other than General Unsecured Claims and Key
Continuing Vendor Claims, the latest of (i) sixty (60) days after the
Effective Date, (ii) sixty (60) days after the applicable Proof of Claim
or request for payment of an Administrative Claim is filed, or (iii) such
other date ordered by the Bankruptcy Court upon motion of the Debtors or
any other party; or (b) for General Unsecured Claims and Key Continuing
Vendor Claims, the latest of (i) one hundred twenty (120) days after the
Effective Date, (ii) sixty (60) days after the applicable Proof of Claim
is filed, or (iii) such other date ordered by the Bankruptcy Court upon
motion of the Debtors or any other party. If an objection has not been
filed to a Proof of Claim or a scheduled Claim by the Claims Objection
Deadline, and the Claim is not otherwise disputed pursuant to the terms of
the Plan, the Claim to which the Proof of Claim or scheduled Claim relates
will be treated as an Allowed Claim if such Claim has not been allowed
earlier.
7. Estimation of Contingent or Unliquidated Claims. The Debtors may,
at any time, request that the Bankruptcy Court estimate any contingent or
unliquidated Claim pursuant to Section 502(c) of the Bankruptcy Code
regardless of whether such Debtor has previously objected to such Claim or
whether the Bankruptcy Court has ruled on any such objection, and the
Bankruptcy Court will retain jurisdiction to estimate any Claim at any
time during litigation concerning any objection to any Claim, including
during the pendency of any appeal relating to any such objection. In the
event the Bankruptcy Court so estimates any contingent or unliquidated
Claim, that estimated amount will constitute either the Allowed amount of
such Claim or a maximum limitation on such Claim, as determined by the
Bankruptcy Court. If the estimated amount constitutes a maximum limitation
on such Claim, the Debtors may elect to pursue any supplemental
proceedings to object to any ultimate payment on such Claim. All of the
aforementioned Claims objection, estimation, and resolution procedures are
cumulative and are not necessarily exclusive of one another. Claims may be
estimated and thereafter resolved by any permitted mechanisms.
F. Disposition of Executory Contracts and Unexpired Leases.
1. Contracts and Leases Deemed Rejected. The Plan provides for the
deemed rejection of all executory contracts or unexpired leases that have
not been otherwise disposed of in some manner. Specifically, each Debtor
will be deemed to have rejected, as of the Effective Date, each executory
contract and unexpired lease to which it is a party unless such contract
or lease (i) was previously assumed or rejected by such Debtor, (ii)
previously expired or terminated pursuant to its own terms, (iii) is the
subject of any pending motion, including to assume, to assume on modified
terms, to reject or to make any other disposition filed by a Debtor on or
before the Confirmation Date, or (iv) is listed on the Schedule of
Executory Contracts to be Assumed by the Debtors,
55
attached as part of the Plan Supplement. The Confirmation Order will
constitute an order of the Bankruptcy Court under Section 365(a) of the
Bankruptcy Code approving the contract and lease assumptions described
above, as of the Effective Date.
Under the Plan, each executory contract and unexpired lease that is
assumed and relates to the use, ability to acquire, or occupancy of real
property will include (i) all modifications, amendments, supplements,
restatements, or other agreements made directly or indirectly by any
agreement, instrument or other document that in any manner affects such
executory contract or unexpired lease and (ii) all executory contracts or
unexpired leases appurtenant to the premises, including all easements,
licenses, permits, rights, privileges, immunities, options, rights of
first refusal, powers, uses, reciprocal easement agreements, vaults,
tunnel or bridge agreements or franchises, and any other interests in real
estate or rights in rem related to such premises, unless any of the
foregoing agreements has been rejected pursuant to an order of the
Bankruptcy Court.
2. Cure with Respect to Assumed Contracts and Leases. Any monetary
amounts by which each executory contract and unexpired lease to be assumed
pursuant to the Plan is in default will be satisfied, under Section
365(b)(1) of the Bankruptcy Code by Cure as that term is defined in the
Plan. If there is a dispute regarding (a) the nature or amount of any
Cure, (b) the ability of any Reorganized Debtor or any assignee to provide
"adequate assurance of future performance" (within the meaning of Section
365 of the Bankruptcy Code) under the contract or lease to be assumed, or
(c) any other matter pertaining to assumption, Cure will occur following
the entry of a Final Order resolving the dispute; provided however, that
not less than ten (10) business days after entry of such Final Order, the
Debtors will be authorized to file a motion to reject any executory
contract or unexpired lease to the extent the Debtors, in the exercise of
their sound business judgment, conclude that the amount of the Cure
obligation as determined by such Final Order, renders assumption of such
executory contract or unexpired lease unfavorable to the Debtors' Estates.
3. Rejections Effected by Terms of Plan. The Debtors reserve the
right, at any time up to two (2) business days prior to Confirmation to
file a motion to assume any executory contract or unexpired lease to which
any Debtor is a party subject to a subsequent hearing which may occur at
the Confirmation Hearing or a later date. Any executory contracts or
unexpired leases that expire by their terms prior to the Effective Date
are deemed to be rejected.
4. Rejection Damages. If the rejection by a Debtor, pursuant to the
Plan or otherwise, of an executory contract or unexpired lease results in
a Claim, then such Claim will be forever barred and will not be
enforceable against any Debtor or Reorganized Debtor or the properties of
any of them unless a Proof of Claim is filed with the clerk of the
Bankruptcy Court and served upon counsel to the Debtors and counsel to the
Creditors Committee, within thirty (30) days after entry of the order
authorizing the rejection of such executory contract or unexpired lease.
5. Compensation and Benefit Programs. The Plan provides that with
the exception of the Debtors' defined benefit pension plan covered by
Title IV of the
56
Employee Retirement Security Act of 1974, as amended ("ERISA") for which
the Debtors are seeking approval of a distress termination pursuant to the
provisions of Section 4041 of ERISA, and except to the extent an employee
compensation or benefit program of the Debtors (i) has been previously
assumed or rejected by an order of the Bankruptcy Court on or before the
Confirmation Date, or (ii) is the subject of a pending motion to assume
filed by a Debtor on or before the Confirmation Date, or (iii) has been
previously terminated, or (iv) has been provided for in subsections (b)
and (c) of Section 7.5 of the Plan, all other employee compensation and
benefit programs of the Debtors, including all pension and retirement
plans (including, without limitation, each of the Debtors' supplemental
executive retirement plans, health and welfare plans) and all programs
subject to Sections 1114 and 1129(a)(13) of the Bankruptcy Code, entered
into before the Petition Date and not since terminated, will be deemed to
be, and will be treated as though they are, executory contracts that are
rejected under the Plan, subject to the Debtors' compliance with the
provisions of Sections 1113 and 1114 of the Bankruptcy Code, to the extent
applicable.
All rights, claims, interests, entitlements, and obligations of the
Debtors under the KERP Order and under the KERP shall continue in full
force and effect.
The provisions of the Bankruptcy Court's order authorizing the
Debtors to pay prepetition wages, compensation and employee benefits,
entered on December 3, 2004, and the order authorizing the continuation of
workers' compensation and employers' liability program and policies and
payment of certain prepetition obligations in respect thereof, also
entered on December 3, 2004, shall remain in effect until the Effective
Date of the Plan.
6. Indemnification Obligations. The Plan provides that in addition
to Indemnification Obligations that are contained in contracts that are
assumed by the Debtors, Indemnification Obligations owed to any present
professionals retained by the Debtors pursuant to Sections 327 or 328 of
the Bankruptcy Code and Indemnification Obligations owed to directors and
officers who are employed with or who served the Debtors as of the
Petition Date, shall be deemed to be, and shall be treated as though they
are, executory contracts that are assumed pursuant to Section 365 of the
Bankruptcy Code under the Plan. All other Indemnification Obligations owed
to any other professionals will be deemed to be, and will be treated as
though they are, executory contracts that are rejected pursuant to Section
365 of the Bankruptcy Code under the Plan pursuant to the Confirmation
Order (unless assumed or rejected by another Final Order).
In addition, the Plan provides that with respect to the rights of
all present and former directors, officers and employees of the Debtors
who are entitled to assert against the Debtors any Indemnification
Obligation in respect of any claims, demands, suits, causes of action or
proceedings against such individual based upon any act or omission related
to such individuals' service (other than for willful misconduct or gross
negligence) with, for, or on behalf of the Debtors (the "Indemnification
Rights"): (i) all Indemnification Rights shall be released and discharged
as of the Effective Date except for those Indemnification Rights held by
current officers and directors who are employed with or who served the
Debtors as of the Petition Date (the "Indemnitees") for
57
whom Indemnification Obligations are assumed pursuant to Section 7.6(a) of
the Plan and any Indemnitee that serves as a director, officer or employee
of the Reorganized Debtors immediately following the Effective Date
together with any Indemnification Rights held by any Indemnitee on account
of events occurring on or after the Petition Date (the "Continuing
Indemnification Rights") (which shall remain in full force and effect to
the fullest extent allowed by law or contract on and after the Effective
Date and shall not be modified, reduced, discharged, or otherwise affected
in any way by the Chapter 11 Case); (ii) the Debtors or the Reorganized
Debtors covenant to maintain directors' and officers' insurance providing
coverage for all Indemnitees for a period of two (2) years after the
Effective Date in at least the scope and amount as currently maintained by
the Debtors, shall maintain tail coverage under policies in existence as
of the Effective Date, to the fullest extent permitted by such provisions,
in each case insuring such parties in respect of any claims demands,
suits, causes of action, or proceedings against such Persons based upon
any act or omission related to such Person's service with, for or on
behalf of the Debtors in at least the scope and amount as currently
maintained by the Debtors (the "Insurance Coverage") and hereby further
indemnify such Indemnitees for any deductible or retention amount that may
be payable in connection with any claim covered under either the foregoing
Insurance Coverage or any prior similar policy; (iii) the insurers who
issue the Insurance Coverage are authorized to pay any professional fees
and expenses incurred in connection with any action relating to any
Indemnification Rights and Continuing Indemnification Rights; and (iv) the
Debtors or the Reorganized Debtors hereby indemnify Indemnitees with
Continuing Indemnification Rights and agree to pay for any deductible or
retention amount that may be payable in connection with any claim covered
under either the foregoing Insurance Coverage or any prior similar policy.
G. Revesting of Assets; Release of Liens; Effective Date Restructurings.
Except as otherwise provided in the Plan, the property of each Debtor's Estate,
together with any property of each Debtor that is not property of its Estate and
that is not specifically disposed of or abandoned pursuant to the Plan will
revest in the applicable Debtor on the Effective Date. Thereafter, each
Reorganized Debtor may operate its business and may use, acquire and dispose of
such property free of any restrictions of the Bankruptcy Code, the Bankruptcy
Rules, and the Bankruptcy Court. As of the Effective Date, all such property of
each Reorganized Debtor will be free and clear of all Claims and Interests,
except as specifically provided in the Plan or the Confirmation Order.
H. Post-consummation Corporate Structure, Management and Operation.
1. Continued Existence. Except as otherwise provided in the Plan
(including with respect to the Restructuring Transactions), each Debtor
will, as Reorganized Debtor, continue to exist after the Effective Date as
a separate corporate entity entitled to all the benefits and protections
provided in the Confirmation Order, with all the powers of a corporation
under applicable law and without prejudice to any right to alter or
terminate such existence (whether by merger, dissolution or otherwise)
under applicable state law.
2. Restructuring Transactions. On or after the Confirmation Date,
the applicable Debtors or Reorganized Debtors may enter into such
restructuring transactions
58
and may take such actions as the Debtors or Reorganized Debtors may
determine to be necessary or appropriate to effect a corporate
restructuring of their respective business or simplify the overall
corporate structure of the Reorganized Debtors (collectively, the
"Restructuring Transactions") all to the extent not inconsistent with any
other term of the Plan. Such Restructuring Transactions may include one or
more mergers, consolidations, restructurings, dispositions, liquidations
or dissolutions, as may be determined by the Debtor or the Reorganized
Debtors to be necessary and appropriate. Consistent with the terms of the
Plan, with respect to any Debtor or Reorganized Debtor, the documents
implementing any Restructuring Transactions shall clearly grant to
creditors of such Debtor or Reorganized Debtor status as third party
beneficiaries to enforce rights granted in the Plan against the surviving,
resulting or acquiring corporation or entity.
3. Post-Consumation Governance Documents. The Certificates or
Articles of Incorporation and/or Operating Agreement, and/or Code of
Regulations of each Debtor, as applicable, will be amended as necessary to
satisfy the provisions of the Plan and the Bankruptcy Code and will
include, among other things, pursuant to Section 1123(a)(6) of the
Bankruptcy Code, a provision prohibiting the issuance of non-voting equity
securities, but only to the extent required by Section 1123(a)(6) of the
Bankruptcy Code. The Articles of Incorporation and/or Operating Agreement,
and/or Code of Regulations, as applicable, of the Reorganized Debtors will
be in substantially the forms of such documents included in the Plan
Supplement.
4. Cancellation of Old Securities and Agreements. On the Effective
Date, except as otherwise provided for in the Plan, (a) the Old Securities
and any other note, bond or indenture evidencing or creating any
indebtedness or obligation of any Debtor will be cancelled, and (b) the
obligations of the Debtors under any agreements, indentures or
certificates of designations governing the Old Securities and any other
note, bond or indenture evidencing or creating any indebtedness or
obligation of any Debtor will be discharged.
5. Cancellation of the Prepetition Transaction Documents and
Issuance of New Senior Notes. On the Effective Date and after receipt of
all distributions under the Plan to which the Prepetition Secured Lenders
are entitled to, except as otherwise provided for herein, (a) the
Prepetition Transaction Documents and any other related agreement
evidencing or creating any indebtedness or obligation of any of the
Debtors shall be cancelled, and (b) the obligations of the Debtors under
the Prepetition Transaction Documents and any other note, bond, or
indenture evidencing or creating any indebtedness or obligations of Amcast
to the Prepetition Secured Lenders shall be discharged, as of the
Effective Date.
The Prepetition Secured Lenders shall receive in satisfaction of the
Secured Claims related to the Prepetition Transaction Documents, in
addition to the New Amcast Common Stock described in Section 6.7 of the
Plan, their pro rata share of the New Senior Notes with the payment and
lien priorities, terms and conditions as set forth in Exhibit B to the
Plan.
59
6. Officers and Directors of Reorganized Debtors. The Plan provides
that the existing officers of the Debtors will serve initially in the same
capacities after the Effective Date for the Reorganized Debtors until
replaced or removed in accordance with the Articles of Incorporation
and/or Code of the Regulations of Reorganized Debtors.
Under the Plan, the initial Board of Directors of Reorganized Amcast
shall be comprised of five (5) members to be selected by the New
Shareholders of Reorganized Amcast in accordance with the New
Shareholders' Agreement. These individuals will be identified in the Plan
Supplement.
7. Funding of Reorganized Debtors. On the Effective Date, the Exit
Facility, as evidenced by a new revolving credit facility, new revolving
promissory notes, if requested by any of the lenders under the Exit
Facility, and all other documents, instruments, and agreements to be
entered into, delivered, or confirmed thereunder or in connection
therewith on the Effective Date, shall become effective. The new revolving
promissory notes issued and all obligations thereunder shall be repaid as
set forth in such notes, the Exit Facility and related documents. The Exit
Facility shall be used, inter alia, for the payment in full of all amounts
outstanding under the DIP Facility as of the Effective Date.
8. Exemption from Certain Transfer Taxes. Pursuant to Section
1146(c) of the Bankruptcy Code, any transfers from the Debtors to the
Reorganized Debtors or any other Person pursuant to the Plan in the United
States, including any Liens granted by the Debtors to secure the Exit
Facility, and the New Senior Notes, will not be taxed under any law
imposing a stamp tax or other similar tax. Such exemption specifically
applies, without limitation, to all documents necessary to evidence and
implement distributions under the Plan, including the documents contained
in the Plan Supplement.
9. Corporate Action. On the Effective Date, the adoption and filing
of the Articles of Incorporation of the Reorganized Debtors and the
Regulations of the Reorganized Debtors, the appointment of directors and
officers of the Reorganized Debtors, and all actions contemplated hereby
will be authorized and approved in all respects (subject to the provisions
hereof) pursuant to the Plan. All matters provided for in the Plan
involving the corporate structure of the Debtors or Reorganized Debtors,
and any corporate action required by the Debtors or Reorganized Debtors in
connection with the Plan, will be deemed to have occurred and will be in
effect, without any requirement of further action by the stockholders or
directors of the Debtors or Reorganized Debtors. On the Effective Date,
the appropriate officers of the Reorganized Debtors and members of the
board of directors of the Reorganized Debtors are authorized and directed
to issue, execute and deliver the agreements, documents, securities and
instruments contemplated by the Plan in the name of and on behalf of the
Reorganized Debtors without the need for any required approvals,
authorizations or consents except for express consents required under the
Plan.
60
I. Confirmation and/or Consummation.
1. Requirements for Confirmation of the Plan. Before the Plan can be
confirmed, the Bankruptcy Court must determine at the hearing on
confirmation of the Plan (the "Confirmation Hearing") that the following
requirements for confirmation, set forth in Section 1129 of the Bankruptcy
Code, have been satisfied:
- The Plan complies with the applicable provisions of the
Bankruptcy Code.
- The Debtors have complied with the applicable provisions of
the Bankruptcy Code.
- The Plan has been proposed in good faith and not by any means
forbidden by law.
- Any payment made or promised by the Debtors or by a Person
issuing securities or acquiring property under the Plan for
services or for costs and expenses in, or in connection with,
the Chapter 11 Case, or in connection with the Plan and
incident to the Chapter 11 Case, has been disclosed to the
Bankruptcy Court, and any such payment made before
confirmation of the Plan is reasonable, or if such payment is
to be fixed after confirmation of the Plan, such payment is
subject to the approval of the Bankruptcy Court as reasonable.
- The Debtors have disclosed (i) the identity and affiliations
of (x) any individual proposed to serve, after confirmation of
the Plan, as a director, officer or voting trustee of the
Reorganized Debtors, (y) any affiliate of the Debtors
participating in a joint plan with the Debtors or (z) any
successor to the Debtors under the Plan (and the appointment
to, or continuance in, such office of such individual(s) is
consistent with the interests of Claim and Interest holders
and with public policy), and (ii) the identity of any insider
that will be employed or retained by the Debtors and the
nature of any compensation for such insider.
- With respect to each Class of Claims or Interests, each
Impaired Claim and Impaired Interest holder either has
accepted the Plan or will receive or retain under the Plan, on
account of the Claims or Interests held by such holder,
property of a value, as of the Effective Date, that is not
less than the amount that such holder would receive or retain
if the Debtors were liquidated on such date under Chapter 7 of
the Bankruptcy Code. See Section X.D.
- The Plan provides that Administrative Claims and Priority
Claims other than Priority Tax Claims will be paid in full on
the Effective Date and that Priority Tax Claims will receive
on account of such Claims deferred cash payments, over period
not exceeding six (6) years after the date of assessment of
such Claims, of a value, as of the Effective Date, equal to
61
the Allowed Amount of such Claims, except to the extent that
the holder of any such Claim has agreed to a different
treatment. See Section VI.C.1.
- If a Class of Claims is Impaired under the Plan, at least one
Class of Impaired Claims has accepted the Plan, determined
without including any acceptance of the Plan by insiders
holding Claims in such Class.
- Confirmation of the Plan is not likely to be followed by the
liquidation, or the need for further financial reorganization,
of the Debtors or any successor to the Debtors under the Plan.
See Section X.A.
- The Plan provides for the continuation after the Effective
Date of all retiree benefits, if any, at the level established
pursuant to Section 1114(e)(1)(B) or 1114(g) of the Bankruptcy
Code at any time prior to confirmation of the Plan, for the
duration of the period the Debtors have obligated themselves
to provide such benefits.
The Debtors believe that, upon receipt of the votes required
to confirm the Plan, the Plan will satisfy all the statutory
requirements of Chapter 11 of the Bankruptcy Code, that the Debtors
have complied or will have complied with all of the requirements of
Chapter 11 and that the Plan has been proposed and submitted to the
Bankruptcy Court in good faith.
2. Conditions to Consummation of the Plan. The conditions that must
be satisfied on or prior to the Effective Date, which is the Business Day
upon which all conditions to the consummation of the Plan have been
satisfied or waived, and is the date on which the Plan becomes effective,
are that: (a) the Confirmation Order will have been entered and will,
among other things: (i) be reasonably acceptable to the DIP Facility Agent
and the Prepetition Secured Lender Agent; (ii) provide that the Debtors
and the Reorganized Debtors are authorized and directed to take all
actions necessary or appropriate to enter into, implement and consummate
the contracts, instruments, releases, leases, indentures and other
agreements or documents created in connection with the Plan; (iii)
authorize the issuance of the New Senior Notes and the New Amcast Common
Stock; and (iv) provide that notwithstanding Bankruptcy Rule 3020(e), the
Confirmation Order will be immediately effective, subject to the terms and
conditions of the Plan; (b) the Confirmation Order will not then be
stayed, vacated, or reversed and shall become a Final Order; (c) the
Certificates or Articles of Incorporation of the Reorganized Debtors, the
Operating Agreements, the Code of Regulations of the Reorganized Debtors,
the New Senior Notes, the Exit Facility, and any and all related documents
will, to the extent any such documents contemplate execution by one or
more persons, have been executed and delivered by the respective parties
thereto, and all conditions precedent to the effectiveness of each such
document will have been satisfied or waived; (d) the Reorganized Debtors
will have arranged and have a binding commitment for credit availability
under the Exit Facility in an amount, form and substance acceptable to the
Debtors and the Prepetition Secured Lender Agent; (e) all material
authorizations, consents and regulatory approvals required, if any, in
connection with consummation of
62
the Plan will have been obtained; and (f) all material actions, documents
and agreements necessary to implement the Plan will have been effected or
executed.
J. Releases, Discharge, Injunctions, Exculpation and Indemnification.
1. Releases by Debtors. The Plan provides for certain releases to be
granted by the Debtors in favor of each other, the Debtors' non-Debtor
subsidiaries, the Prepetition Secured Lenders, the Prepetition Secured
Lender Agent, the DIP Facility Agent, the DIP Facility Lenders, the
Creditors Committee (but not its members in their individual capacities),
or any of their respective directors, officers, employees (except as
limited in Section 12.9(a) of the Plan), and advisors, attorneys, and
other professionals serving immediately prior to the Effective Date and
those of Debtors' directors, officers and employees designated on Exhibit
C to the Plan. Specifically, as of the Effective Date, for good and
valuable consideration in return for the compromises embodied in the Plan,
the receipt and adequacy of which is hereby confirmed, the Debtors, the
Reorganized Debtors and any person seeking to exercise the rights of the
Debtors' estate, including, without limitation, any successor to the
Debtors and any estate representative appointed or selected pursuant to
Section 1123(b)(3) of the Bankruptcy Code, will be deemed to forever
release, waive and discharge all claims, obligations, suits, judgments,
damages, demands, debts, rights, causes of action (including claims or
causes of action arising under Chapter 5 of the Bankruptcy Code), and
liabilities whatsoever in connection with or related to the Debtors, the
Chapter 11 Case, or the Plan (other than the rights of the Debtors and the
Reorganized Debtors to enforce the Plan and the contracts, instruments,
releases, indentures and other agreements or documents delivered
thereunder),whether liquidated or unliquidated, fixed or contingent,
matured or unmatured, known or unknown, foreseen or unforeseen, then
existing or thereafter arising, in law, equity or otherwise, that are
based in whole or in part on any act, omission, transaction, event or
other occurrence taking place on or prior to the Effective Date in any way
relating to the Debtors, the Reorganized Debtors, the Chapter 11 Case, or
the Plan, and that may be asserted by or on behalf of the Debtors, the
Estates or the Reorganized Debtors against (i) any of the Debtors and the
Debtors' Non-Debtor subsidiaries, (ii) the Prepetition Secured Lenders,
the Prepetition Secured Lender Agent, the DIP Facility Agent, the DIP
Facility Lenders, and the Creditors Committee (but not its members in
their individual capacities), (iii) any of the current and former
directors, officers, employees (except as limited herein below), and
advisors, attorneys, and other professionals retained by the Debtors, the
Debtors' subsidiaries and non-Debtor subsidiaries, the Prepetition Secured
Lenders, the Prepetition Secured Lender Agent, the DIP Facility Agent, the
DIP Facility Lenders, and the Creditors Committee (but not its members in
their individual capacities) serving immediately prior to the Effective
Date, and (iv) those of Debtors' directors, officers and employees
designated on Exhibit C of the Plan, but specifically excluding any Person
identified in clauses (i) through (iv) above who has, on or before the
Effective Date, asserted any claim (other than a Proof of Claim as to
which the Debtors have not made any objection on or before the applicable
Objection Deadline) or initiated any suit, action or similar proceeding
against the Debtors that has not been waived by such Person in its
entirety on or prior to the Effective Date; provided, however, that
nothing in Section 12.9(a) of the Plan will be deemed to prohibit the
Debtors or the Reorganized Debtors from asserting and enforcing any
claims,
63
obligations, suits, judgments, demands, debts, rights, causes of action or
liabilities they may have against any employee (other than any director or
officer) that is based upon an alleged breach of a confidentiality,
noncompete or any other contractual or fiduciary obligation owed to the
Debtors or the Reorganized Debtors.
The Debtors do not believe that there are any valid claims,
obligations, suits, judgments, damages, demands, debts, rights, causes of
action and liabilities that they hold against any of their directors,
officers and employees, against any of their subsidiaries, or against any
of the Prepetition Secured Lenders, the Prepetition Secured Lender Agent
the DIP Facility Agent, the DIP Facility Lenders, or the Creditors
Committee.
As to the Debtors' current directors, officers and employees, the
consideration for such release is the service rendered by such individuals
during the pendency of the Chapter 11 Case and the need for their
continued dedication after the Effective Date to fully consummate a
successful reorganization. The Debtors will be hampered in their
consummation efforts if their directors, officers and employees are
subject to claims and potential litigation that will distract their
attention from operational and other business matters. None of such
individuals are currently the target of any actual claim or litigation,
and the Debtors are not aware of any credible theory on which they might
pursue claims and litigation against such individuals.
Under applicable law, the Debtors will have the burden at the
Confirmation Hearing of justifying the releases proposed to be given by
the Debtors. The Bankruptcy Court will determine whether the Debtors have
met their burden or not, and any party desiring to do so may object to
some or all of the releases proposed to be granted.
2. Releases by Holders of Claims and Interests. In furtherance of
the release provisions of the Plan, as of the Effective Date, for good and
valuable consideration in return for the compromises embodied in the Plan,
the receipt and adequacy of which is hereby confirmed, each holder of a
Claim that affirmatively votes in favor of the Plan will be deemed to
forever release, waive and discharge all claims, obligations, suits,
judgments, damages, demands, debts, rights, causes of action, and
liabilities whatsoever against (i) the Debtors' non-Debtor subsidiaries,
if any, (ii) the Prepetition Secured Lenders, the Prepetition Secured
Lender Agent, the DIP Facility Agent, the DIP Facility Lenders, and the
Creditors Committee (but not its members in their individual capacities)
and their respective present agents or professionals, and (iii) any of the
directors, officers and employees of the Debtors serving immediately prior
to the Effective Date, those of Debtors' directors, officers and employees
designated on Exhibit C to the Plan, and any of the Debtors' present
agents or professionals (including any professionals retained by the
Debtors) (the Persons identified in clauses (i) through (iii)
collectively, the "Claimholder Releasees") in connection with or related
to the Debtors, the Chapter 11 Case, or the Plan (other than the rights
under the Plan and the contracts, instruments, releases, indentures and
other agreements or documents delivered thereunder), whether liquidated or
unliquidated, fixed or contingent, matured or unmatured, known or unknown,
foreseen or unforeseen, then existing or thereunder arising, in law,
equity or otherwise, that are based in whole or part on any act, omission,
transaction, event or other occurrence taking place on or prior to the
Effective Date in any way relating to the
64
Debtors or the Reorganized Debtors, the Chapter 11 Case, or the Plan,
provided, however, that no such release shall be given to any Person
(other than the Debtors) with respect to any contractual obligation owed
to the holder of a Claim, including without limitation, obligations under
promissory notes, guarantees, or similar instruments, whether related to
the Debtors or otherwise.
Each of the Claimholder Releasees will be deemed to forever release,
waive and discharge any claims, obligations, suits, judgments, damages,
demands, debts, rights, causes of action, and liabilities whatsoever
taking place on or prior to the Effective Date in any way relating to the
Debtors or the Reorganized Debtors, the Chapter 11 Case, or the Plan,
against each holder of a Claim that affirmatively votes in favor of the
Plan.
Creditors may have independent claims against one or more of the
Claimholder Releasees. The Debtors have no actual knowledge of any such
claims, but cannot warrant to creditors that they do not exist. Since a
vote in favor of the Plan will release whatever creditor claims do exist,
if any, against Claimholder Releasees, creditors should consult their own
counsel for information and advice as to whether any such claims exist and
the value or merit of any such claims. If a creditor does not wish to give
the releases contemplated under the Plan, then the creditor should vote to
reject the Plan.
3. Discharge and Discharge Injunction. Confirmation of the Plan
effects a discharge of all Claims against the Debtors. As set forth in the
Plan, all consideration distributed under the Plan will be in exchange
for, and in complete satisfaction, settlement, discharge and release of,
all Claims of any nature whatsoever against the Debtors or any of their
assets or properties and, regardless of whether any property will have
been abandoned by order of the Bankruptcy Court, retained, or distributed
or retained pursuant to the Plan on account of such Claims. Upon the
Effective Date, the Debtors, and each of them, will be deemed discharged
and released under Section 1141(d)(1)(A) of the Bankruptcy Code from any
and all Claims, including, but not limited to, demands and liabilities
that arose before the Effective Date, and all debts of the kind specified
in Section 502 of the Bankruptcy Code, whether or not a Proof of Claim
based upon such debt is filed or deemed filed under Section 501 of the
Bankruptcy Code, a Claim based upon such debt is Allowed under Section 502
of the Bankruptcy Code, or the holder of a Claim based upon such debt
accepted the Plan. In addition, all Amcast Interests will be terminated
except as otherwise provided in the Plan.
Under the Plan, as of the Effective Date, except as provided in the
Plan or in the Confirmation Order, all Persons will be precluded from
asserting against the Debtors or the Reorganized Debtors, any other or
further claims, debts, rights, causes of action, liabilities or equity
interests relating to the Debtors based upon any act, omission,
transaction or other activity of any nature that occurred prior to the
Effective Date. In accordance with the foregoing, except as provided in
the Plan or the Confirmation Order, the Confirmation Order will be a
judicial determination of discharge of all such Claims and other debts and
liabilities against the Debtors and termination of all Amcast Interests,
pursuant to Sections 524 and 1141 of the Bankruptcy Code, and such
discharge will void any judgment obtained against the Debtors at any time,
to the extent that such judgment relates to a discharged Claim or
terminated Interest.
65
In addition, nothing in the Plan will release, discharge or preclude
any remedies of the United States Environmental Protection Agency or any
state environmental protection agency that are not within the definition
of "claim" as set forth in Section 101(5) of the Bankruptcy Code.
The discharge of the Debtors pursuant to the Plan is not intended to
limit in any way the Debtors' insurance coverage or to deprive any third
party of any rights to such coverage that may otherwise exist.
In furtherance of the discharge of Claims and the termination of
Amcast Interests, the Plan provides that, except as provided in the Plan
or in the Confirmation Order, as of the Effective Date, all Persons that
have held, currently hold, may hold, or allege that they hold a Claim or
other debtor liability that is discharged or an Interest or other right of
an equity security holder that is terminated pursuant to the terms of the
Plan are permanently enjoined from taking any of the following actions
against the Debtors, the Reorganized Debtors and their respective
subsidiaries or their property on account of any such discharged Claims,
debts, or liabilities or terminated Interests or rights: (i) commencing or
continuing, in any manner or in any place, any action or other proceeding;
(ii) enforcing, attaching, collecting, or recovering in any manner any
judgment, award, decree or order; (iii) creating, perfecting or enforcing
any Lien or encumbrance; (iv) asserting a setoff against any debt,
liability or obligation due to the Debtors or the Reorganized Debtors; or
(v) commencing or continuing any action, in each such case in any manner,
in any place, or against any person that does not comply with or is
inconsistent with the provisions of the Plan. By accepting distributions
pursuant to the Plan, each holder of an Allowed Claim receiving
distributions pursuant to the Plan will be deemed to have specifically
consented to the injunctions set forth in Section 12.11 of the Plan.
4. Exculpation Relating to Chapter 11 Case. The Plan contains
standard exculpation provisions applicable to the key parties in interest
with respect to their conduct in the Chapter 11 Case. Specifically, the
Plan provides that, none of the Debtors or their respective subsidiaries,
the Reorganized Debtors, the Prepetition Secured Lenders, the Prepetition
Secured Lender Agent, the DIP Facility Agent, the DIP Facility Lenders,
the Creditors Committee, or any of their respective present or former
members, officers, directors, employees, advisors, professionals and
agents will have or incur any liability to any holder of a Claim or an
Interest, or any other party in interest, or any of their respective
agents, employees, representatives, advisors, attorneys, or affiliates, or
any of their successors or assigns, for any act or omission in connection
with, relating to, or arising out of, the Chapter 11 Case, the
formulation, negotiation, or implementation of the Plan, the solicitation
of acceptances of the Plan, the pursuit of Confirmation of the Plan, the
Confirmation of the Plan, the consummation of the Plan, or the
administration of the Plan or the property to be distributed under the
Plan, except for acts or omissions which are the result of fraud, gross
negligence, or willful misconduct or willful violation of federal or state
securities laws or the Internal Revenue Code, and in all respects will be
entitled to reasonably rely upon the advice of counsel with respect to
their duties and responsibilities under the Plan.
66
Moreover, the Plan provides that no holder of a Claim or an
Interest, no other party in interest, none of their respective agents,
employees, representatives, advisors, attorneys, or affiliates, and none
of their respective successors or assigns will have any right of action
against any Debtor, any Reorganized Debtor, any of its subsidiaries, the
Creditors Committee, the Prepetition Secured Lenders, the DIP Facility
Agent, the DIP Facility Lenders, or any of their respective present or
former members, officers, directors, employees, advisors, professionals
and agents for any act or omission in connection with, relating to, or
arising out of, the Chapter 11 Case, the formulation, negotiation or
implementation of the Plan, solicitation of acceptances of the Plan, the
pursuit of Confirmation of the Plan, the Confirmation of the Plan, the
consummation of the Plan, or the administration of the Plan or the
property to be distributed under the Plan, except for acts or omissions
which are the result of fraud, or willful misconduct or willful violation
of federal or state securities laws or the Internal Revenue Code.
5. Post-Effective Date Indemnifications. The Plan requires that the
Articles of Incorporation, Code of Regulations and Operating Agreement, as
applicable, of the Reorganized Debtors contain provisions which (i)
eliminate the personal liability of the Debtors' former, present and
future directors and officers for monetary damages resulting from breaches
of their fiduciary duties (other than for willful misconduct or gross
negligence) and (ii) require such Reorganized Debtors, subject to
appropriate procedures, to indemnify those of the Debtors' directors,
officers serving immediately following the Effective Date for all claims
and actions (other than for willful misconduct or gross negligence),
including, without limitation, for pre-Effective Date acts and omissions.
In addition, the Plan requires that on or as of the Effective Date, the
Reorganized Debtors will enter into separate written agreements providing
for the indemnification of each Person, as listed on Exhibit C to the
Plan, who is a director, officer or member of management of such
Reorganized Debtor as of the Effective Date for all claims and actions
(other than for willful misconduct or gross negligence), including,
without limitation, for pre-Effective Date acts and omissions.
K. Preservation of Rights of Action. Litigation Rights consist of claims,
rights of action, suits or proceedings, whether in law or in equity, whether
known or unknown, that the Debtors or their Estates may hold against any Person,
including, without limitation, those Litigation Rights described in Appendix F
attached hereto. The Plan provides that except as otherwise provided in the Plan
or the Confirmation Order, or in any contract, instrument, release, indenture or
other agreement entered into in connection with the Plan, in accordance with
Section 1123(b) of the Bankruptcy Code, on the Effective Date, each Debtor or
Reorganized Debtor will retain all of their respective Litigation Rights that
such Debtor or Reorganized Debtor may hold against any Person whether or not
described in Appendix F attached hereto. Each Debtor or Reorganized Debtor will
retain and may enforce, sue on, settle or compromise (or decline to do any of
the foregoing) all such Litigation Rights. Each Debtor or Reorganized Debtor or
their respective successor(s) may pursue such retained Litigation Rights as
appropriate, in accordance with the best interests of the Reorganized Debtors or
their successor(s) who hold such rights in accordance with applicable law and
consistent with the terms of the Plan.
67
Litigation Rights include potential avoidance or other bankruptcy causes
of action including, without limitation, causes of action arising under Sections
544, 545, 547, 548, 549, 550, and 553 of the Bankruptcy Code. Litigation Rights
also include non-bankruptcy claims, rights of action, suits or proceedings that
arise in the ordinary course of the Debtors' businesses. The Debtors currently
hold certain claims or rights of action against a number of parties. The Debtors
also have claims against certain parties that may ripen into litigation.
The Debtors reserve the right to settle or otherwise not pursue any
pending or potential claims, rights of action, suits or proceedings. Nothing
contained in this Disclosure Statement should prejudice the Debtors' rights to
pursue any claims, rights of action, suits or proceedings that have arisen or
may arise in the future in the ordinary course of the Debtors' businesses.
L. Retention of Jurisdiction. Under Sections 105(a) and 1142 of the
Bankruptcy Code, and notwithstanding entry of the Confirmation Order and
occurrence of the Effective Date, and except as otherwise ordered by the
Bankruptcy Court, the Plan provides that the Bankruptcy Court will retain
exclusive jurisdiction over all matters arising out of, and related to, the
Chapter 11 Case and the Plan to the fullest extent permitted by law, including,
among other things, jurisdiction to:
- allow, disallow, determine, liquidate, classify, estimate or
establish the priority or secured or unsecured status of any Claim
or Interest not otherwise Allowed under the Plan (other than
personal injury or wrongful death Claims, unless agreed by the
holder), including the resolution of any request for payment of any
Administrative Claim and the resolution of any objections to the
allowance or priority of Claims or Interests;
- hear and determine all applications for compensation and
reimbursement of expenses of Professionals under the Plan or under
Sections 327, 328, 330, 331, 503(b), 1103 or 1129(a)(4) of the
Bankruptcy Code; provided, however, that from and after the
Effective Date, the payment of the fees and expenses of the retained
Professionals of the Reorganized Debtors will be made in the
ordinary course of business and will not be subject to the approval
of the Bankruptcy Court;
- hear and determine all matters with respect to the assumption or
rejection of any executory contract or unexpired lease to which a
Debtor is a party or with respect to which a Debtor may be liable,
including, if necessary, the nature or amount of any required Cure
or the liquidation or allowance of any Claims arising therefrom;
- effectuate performance of and payments under the provisions of the
Plan;
- hear and determine any and all adversary proceedings, motions,
applications and contested or litigated matters arising out of,
under or related to the Chapter 11 Case or the Litigation Rights;
- enter such orders as may be necessary or appropriate to execute,
implement or consummate the provisions of the Plan and all
contracts, instruments, releases and
68
other agreements or documents created in connection with the Plan,
this Disclosure Statement or the Confirmation Order;
- hear and determine disputes arising in connection with the
interpretation, implementation, consummation or enforcement of the
Plan, including disputes arising under agreements, documents or
instruments executed in connection with the Plan, provided, however,
that any dispute arising under or in connection with the Exit
Facility or New Senior Notes will be determined in accordance with
the governing law designated by the applicable document;
- consider any modifications of the Plan, cure any defect or omission
or reconcile any inconsistency in any order of the Bankruptcy Court,
including, without limitation, the Confirmation Order;
- issue injunctions, enter and implement other orders, or take such
other actions as may be necessary or appropriate to restrain
interference by any entity with the implementation, consummation or
enforcement of the Plan or the Confirmation Order;
- enter and implement such orders as may be necessary or appropriate
if the Confirmation Order is for any reason reversed, stayed,
revoked, modified or vacated;
- hear and determine any matters arising in connection with or
relating to the Plan, the Plan Supplement, this Disclosure
Statement, the Confirmation Order or any contract, instrument,
release or other agreement or document created in connection with
the Plan, the Plan Supplement, this Disclosure Statement or the
Confirmation Order;
- enforce all orders, judgments, injunctions, releases, exculpations,
indemnifications and rulings entered in connection with the Chapter
11 Case;
- except as otherwise limited, recover all assets of the Debtors and
property of the Estates, wherever located;
- hear and determine matters concerning state, local and federal taxes
in accordance with Sections 346, 505 and 1146 of the Bankruptcy
Code;
- hear and determine all disputes involving the existence, nature or
scope of the Debtors' discharge;
- hear and determine such other matters as may be provided in the
Confirmation Order or as may be authorized under, or not
inconsistent with, provisions of the Bankruptcy Code; and
- enter a final decree closing the Chapter 11 Case.
69
If the Bankruptcy Court abstains from exercising, or declines to exercise,
jurisdiction or is otherwise without jurisdiction over any matter arising in,
arising under, or related to the Chapter 11 Case, including the matters set
forth in Section 11.1 of the Plan, the provisions of Article XI of the Plan will
have no effect upon and will not control, prohibit or limit the exercise of
jurisdiction by any other court having jurisdiction with respect to such matter.
M. Amendment, Alteration, Revocation and Modification of Plan. The Debtors
may alter, amend or modify the Plan under Section 1127(a) of the Bankruptcy Code
at any time on or prior to the Confirmation Date. After the Confirmation Date
and prior to substantial consummation of the Plan, as defined in Section 1101(2)
of the Bankruptcy Code, the Debtors may, under Section 1127(b) of the Bankruptcy
Code, institute proceedings in the Bankruptcy Court to remedy any defect or
omission or reconcile any inconsistencies in the Plan or the Confirmation Order,
provided, however, that prior notice of such proceedings will be served in
accordance with the Bankruptcy Rules or order of the Bankruptcy Court.
If, prior to Confirmation, any term or provision of the Plan is held by
the Bankruptcy Court to be invalid, void or unenforceable, the Bankruptcy Court,
at the request of the Debtors, will have the power to alter and interpret such
term or provision to make it valid or enforceable to the maximum extent
practicable, consistent with the original purpose of the term or provision held
to be invalid, void or unenforceable, and such term or provision will then be
applicable as altered or interpreted. Notwithstanding any such holding,
alteration or interpretation, the remainder of the terms and provisions of the
Plan will remain in full force and effect and will in no way be affected,
impaired or invalidated by such holding, alteration or interpretation. The
Confirmation Order will constitute a judicial determination and will provide
that each term and provision of the Plan, as it may have been altered or
interpreted in accordance with the foregoing, is valid and enforceable pursuant
to its terms.
The Debtors reserve the right to revoke or withdraw the Plan at anytime
prior to the Confirmation Date and to file subsequent plans of reorganization.
If the Debtors revoke or withdraw the Plan, or if Confirmation or the Effective
Date does not occur, then (a) the Plan will be null and void in all respects,
(b) any settlement or compromise embodied in the Plan (including the fixing or
limiting to an amount certain any Claim or Class of Claims), assumption or
rejection of executory contracts or leases effected by the Plan, and any
document or agreement executed pursuant to the Plan will be deemed null and
void, and (c) nothing contained in the Plan, and no acts taken in preparation
for consummation of the Plan, will (i) constitute or be deemed to constitute a
waiver or release of any Claims by or against, or any Interests in, the Debtors
or any other Person, (ii) prejudice in any manner the rights of the Debtors or
any Person in any further proceedings involving a Debtor, or (iii) constitute an
admission of any sort by any Debtor or any other Person.
N. Plan Implementing Documents. The documents necessary to implement the
Plan include the following:
- Articles of Incorporation of the Reorganized Debtors;
- Code of Regulations of the Reorganized Debtors;
70
- the Exit Facility (and any related documents, including the New
Senior Notes), which documents will evidence the exit financing
obtained by Amcast, and will have the principal terms and conditions
set forth on Exhibit A to the Plan.
Such documents will be submitted as part of the Plan Supplement, which
will be filed with the Clerk of the Bankruptcy Court at least five (5) Business
Days prior to the date of the commencement of the Confirmation Hearing. Upon
such filing, all documents included in the Plan Supplement may be inspected in
the office of the Clerk of the Bankruptcy Court during normal court hours.
Holders of Claims or Interests may obtain a copy of any document included in the
Plan Supplement upon written request to the Debtors in accordance with Section
12.16 of the Plan.
ARTICLE VII
CERTAIN RISK FACTORS TO BE CONSIDERED
The holders of Claims in Classes 2, 3, 4 and 5 should read and carefully
consider the following factors, as well as the other information set forth in
this Disclosure Statement (and the documents delivered together herewith and/or
incorporated by reference herein), before deciding whether to vote to accept or
reject the Plan. These risk factors should not, however, be regarded as
constituting the only risks associated with the Plan and its implementation.
A. General Considerations. The Plan sets forth the means for satisfying
the Claims against each of the Debtors. Certain Claims and Interests receive no
distributions pursuant to the Plan. Nevertheless, reorganization of certain of
the Debtors' businesses and operations under the proposed Plan avoids the
potentially adverse impact of a liquidation on the Debtors' customers,
suppliers, employees, communities and other stakeholders.
B. Certain Bankruptcy Considerations. Even if all voting Impaired Classes
vote in favor of the Plan, and if with respect to any Impaired Class deemed to
have rejected the Plan the requirements for "cramdown" are met, the Bankruptcy
Court as a court of equity may exercise substantial discretion and may choose
not to confirm the Plan. Section 1129 of the Bankruptcy Code requires, among
other things, a showing that confirmation of the Plan will not be followed by
liquidation or the need for further financial reorganization of the Debtors,
(see Section X.A), and that the value of distributions to dissenting holders of
Claims and Interests will not be less than the value such holders would receive
if the Debtors were liquidated under Chapter 7 of the Bankruptcy Code. See
Section X.D. Although the Debtors believe that the Plan will meet such tests,
there can be no assurance that the Bankruptcy Court will reach the same
conclusion. See Appendix E annexed hereto for a liquidation analysis of the
Debtors.
If a liquidation or protracted reorganization were to occur, there is a
significant risk that the value of the Debtors' enterprise would be
substantially eroded to the detriment of all stakeholders.
The Debtors' future results are dependent upon the successful confirmation
and implementation of a plan of reorganization. Failure to obtain this approval
in a timely manner could adversely affect the Debtors' operating results, as the
Debtors' ability to obtain financing to
71
fund their operations and their relations with their customers and suppliers may
be harmed by protracted bankruptcy proceedings. Once a plan of reorganization is
approved and implemented, the Debtors' operating results may be adversely
affected by the possible reluctance of prospective lenders, customers and
suppliers to do business with a company that recently emerged from bankruptcy
proceedings.
C. Claims Estimations. There can be no assurance that any estimated Claim
amounts set forth in this Disclosure Statement are correct. The actual Allowed
amount of Claims likely will differ in some respect from the estimates. The
estimated amounts are subject to certain risks, uncertainties, and assumptions.
Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, the actual Allowed amount of Claims may
vary from those estimated herein.
D. Conditions Precedent to Consummation. The Plan provides for certain
conditions that must be satisfied (or waived) prior to confirmation of the Plan
and for certain other conditions that must be satisfied (or waived) prior to the
Effective Date. As of the date of this Disclosure Statement, there can be no
assurance that any or all of the conditions in the Plan will be satisfied (or
waived). In addition, the Debtors' current DIP Facility expires on June 15,
2005. The Debtors will need to obtain an extension of the DIP Facility or
alternative debtor-in-possession financing through the Effective Date of the
Plan in order to complete its restructuring. Accordingly, even if the Plan is
confirmed by the Bankruptcy Court, there can be no assurance that the Plan will
be consummated and the restructuring completed.
E. Inherent Uncertainty of Financial Projections. The Projections set
forth in Appendix B hereto cover the operations of the Reorganized Debtors
through fiscal year 2008. These Projections are based on numerous assumptions
that are an integral part of the Projections, including confirmation and
consummation of the Plan in accordance with its terms; realization of the
operating strategy of the Debtors; industry performance; no material adverse
changes in applicable legislation or regulations, or the administration thereof,
including environmental legislation or regulations, exchange rates or generally
accepted accounting principles; general business and economic conditions;
competition; retention of key management and other key employees; adequate
financing; absence of material contingent or unliquidated litigation, indemnity
or other claims; and other matters, many of which will be beyond the control of
the Reorganized Debtors and some or all of which may not materialize.
To the extent that the assumptions inherent in the Projections are based
upon future business decisions and objectives, they are subject to change. In
addition, although they are presented with numerical specificity and are based
on assumptions considered reasonable by the Debtors, the assumptions and
estimates underlying the Projections are subject to significant business,
economic and competitive uncertainties and contingencies, many of which will be
beyond the control of the Reorganized Debtors. Accordingly, the Projections are
only estimates and are necessarily speculative in nature. It can be expected
that some or all of the assumptions in the Projections will not be realized and
that actual results will vary from the Projections, which variations may be
material and are likely to increase over time. In light of the foregoing,
readers are cautioned not to place undue reliance on the Projections. The
projected financial information contained herein should not be regarded as a
representation or warranty by the Debtors, the Debtors' advisors or any other
Person that the Projections can or will be achieved.
72
F. Certain Risk Factors Relating to Securities to be Issued Under the
Plan.
1. No Current Public Market. There currently is no market for the
New Amcast Common Stock that will be issued pursuant to the Plan. Amcast
does not intend to list the New Amcast Common Stock on any national or
regional securities exchange or qualify the New Amcast Common Stock for
quoting on any inter dealer quotation or other system. The New Amcast
Common Stock might not be eligible for any such listing and/or quotation.
As a result, the New Amcast Common Stock might be traded only infrequently
in transactions arranged through brokers or otherwise, and reliable market
quotations for the New Amcast Common Stock might not be available.
Upon issuance of the New Amcast Common Stock pursuant to the Plan,
Amcast will not be required to cause the New Amcast Common Stock to be
registered under Section 12(g) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). Amcast currently does not expect to
voluntarily effect such registration. Therefore, Amcast will not be
required to file periodic reports and other information under the Exchange
Act. If in the future Amcast effects the registration of the New Amcast
Common Stock under the Exchange Act, voluntarily or otherwise, it may
cause the New Amcast Common Stock to be deregistered at any time that it
is eligible to do so. If at any time Amcast provides periodic financial or
other information to the public or the holders of the New Amcast Common
Stock outside of the requirements of the Exchange Act, as it currently
proposes to do, it will be permitted to discontinue this practice at any
time. Therefore, holders of New Amcast Common Stock might be unable to
obtain financial and other material information about Amcast, and this
might inhibit their ability to trade the New Amcast Common Stock.
Accordingly, there can be no assurance as to the development or
liquidity of any market for the New Amcast Common Stock. If a trading
market does not develop or is not maintained, holders of the New Amcast
Common Stock might experience difficulty in reselling such securities or
might be unable to sell them at all. Even if such market were to exist,
the New Amcast Common Stock could trade at prices higher or lower than the
value attributed to such securities in connection with their distribution
under the Plan, depending upon many factors, including, without
limitation, the general conditions of the economy and the markets in which
Amcast competes, the performance of and investor expectations for Amcast
and its business, the market for similar securities and prevailing
interest rates.
Persons to whom the New Amcast Common Stock is issued pursuant to
the Plan might prefer to liquidate their investment rather than hold such
securities on a long-term basis. Accordingly, any market that does develop
for the New Amcast Common Stock might be volatile. Other factors, such as
the likelihood that Amcast will not declare dividends for the foreseeable
future, might further depress any market for the New Amcast Common Stock.
Resales of the New Amcast Common Stock by certain persons who are
deemed to be "underwriters" pursuant to Section 1145(b) of the Bankruptcy
Code will be restricted. For further discussion, see Section VIII.B below.
73
2. Restrictions on Payment of Dividends. Amcast does not anticipate
that cash dividends or other distributions will be paid with respect to
the New Amcast Common Stock in the foreseeable future. In addition,
restrictive covenants in certain debt instruments to which Amcast will be
a party, including the Exit Facility, might limit the ability of Amcast to
pay dividends.
3. Anti-Takeover Effects. Amcast's Articles of Incorporation and
Code of Regulations, as well as the General Corporation Law in the
Debtors' relevant state of incorporation, contain provisions that might
have the effect of delaying, deterring or preventing a change in control
of Amcast. These provisions could have the effect of discouraging a
potential acquirer from making an unsolicited bid for the company,
including a bid that might be favorable to Amcast and the holders of the
New Amcast Common Stock. These provisions could also have the effect of
making the removal of Amcast's directors and management more difficult,
even when the removal might be in the best interests of Amcast and the
holders of the New Amcast Common Stock.
G. Competition. The high degree of competition in the Debtors' businesses
and the potential for new competitors to enter into those businesses could cause
actual results to differ from those expected by the Debtors.
H. Raw Materials / Production. The Debtors purchase raw materials from a
number of suppliers and, believe that the raw materials needed for its
businesses will be available in sufficient supply on a competitive basis for the
foreseeable future. However, increases in the cost of raw materials, including
energy and other inputs used to make the Reorganized Debtors' products could
affect future sale volumes, prices and margins for the products of the
Reorganized Debtors. In addition, future technological advances may affect the
Reorganized Debtors' product lines. Also, potential volatility in production
schedules, delays in the introduction of new products and delays in achieving
expected cost reductions may impact the Reorganized Debtors' production
efficiency.
I. Market Conditions. Continued or increased price pressure and changes in
domestic and international economic conditions could have an adverse effect on
the Debtors' businesses.
J. Environmental. The potential costs related to environmental matters and
their estimated impact on future operations are difficult to predict due to the
uncertainties regarding the extent of any required remediation, the complexity
and interpretation of applicable laws and regulations, possible modification of
existing laws and regulations or the adoption of new laws or regulations in the
future, and the numerous alternative remediation methods and their related
varying costs.
1. Laws and Regulations. The Debtors' various manufacturing
operations, which have been conducted at a number of facilities for many
years, are subject to numerous laws and regulations relating to the
protection of human health and the environment. Modifications of existing
laws and regulations or the adoption of new laws and regulations in the
future, particularly with respect to environmental and safety standards,
could require capital expenditures which may be material or otherwise
74
adversely impact the Debtors operations. Also, if environmental laws and
regulations affecting the Company's operations become more stringent,
costs for environmental compliance may increase above historical levels.
In addition, the Comprehensive Environmental Response Compensation
and Liability Act of 1980 ("CERCLA") and similar state statutes have been
construed as imposing joint and several liability, under certain
circumstances, on present and former owners and operators of contaminated
sites and transporters and generators of hazardous substances regardless
of fault. The Debtors' facilities have been operated for many years by the
Debtors or its prior owners and operators, and adverse environmental
conditions of which the Debtors are not aware may exist. Although the
Debtors believe that their reserves are adequate, the discovery of
additional or unknown environmental contamination at any of the Debtors'
current facilities could have a material adverse effect on the Debtors'
financial condition or results of operation.
Accruals for environmental liabilities are recorded based on current
interpretations of applicable environmental laws and regulations when it
is probable that a liability has been incurred and the amount of such
liability can be reasonably estimated. Estimates are established based
upon information available to management to date, the nature and extent of
the environmental liability, the Company's experience with similar
activities undertaken, estimates obtained from outside consultants and the
legal and regulatory framework in the jurisdiction in which the liability
arose. The potential costs related to environmental matters and their
estimated impact on future operations are difficult to predict due to the
uncertainties regarding the extent of any required remediation, the
complexity and interpretation of applicable laws and regulations, possible
modification of existing laws and regulations or the adoption of new laws
or regulations in the future, and the numerous alternative remediation
methods and their related varying costs. The material components of the
Debtors' environmental accruals include potential costs, as applicable,
for investigation, monitoring, remediation and ongoing maintenance
activities at any affected site. Accrued liabilities for environmental
matters were $2.8 million at December 31, 2004.
2. Administrative and Judicial Proceedings. As a result of its
operations, the Debtors are involved from time to time in administrative
and judicial proceedings and inquiries relating to environmental matters.
Based on information available at this time with respect to potential
liability involving these facilities, the Debtors believe that any such
liability will not have a material adverse effect on their financial
condition, cash flows or results of operations.
K. Reliance on Key Personnel. The Debtors operate a business that is
highly dependent on skilled employees. A loss of a significant number of key
professionals or skilled employees could have a material adverse effect on the
Reorganized Debtors and may threaten their ability to survive as going concerns.
The Debtors' successful transition through the restructuring process is
dependent in part on their ability to retain and motivate their officers and key
employees. There can be no assurance that the Debtors will be able to retain and
employ qualified management and technical
75
personnel. The Debtors obtained Bankruptcy Court approval of the implementation
of a retention plan designed to retain certain of their key employees. To date,
the plans have had their intended effect, but there is no guarantee that their
effectiveness will continue or that the post-restructuring environment will not
introduce new risks to employee retention.
L. Leverage. The Debtors believe that they will emerge from Chapter 11
with a reasonable level of debt that can be effectively serviced. However, they
may find that they are overleveraged, which could have significant negative
consequences, including:
- it may become more difficult for the Reorganized Debtors to satisfy
their obligations with respect to all of their indebtedness;
- the Reorganized Debtors may be vulnerable to a downturn in the
industries in which they operate or a downturn in the economy in
general;
- the Reorganized Debtors may be required to dedicate a substantial
portion of their cash flow from operations to fund working capital,
capital expenditures and other general corporate requirements;
- the Reorganized Debtors may be limited in their flexibility to plan
for, or react to, changes in their businesses and the industry in
which they operate;
- the Reorganized Debtors may be placed at a competitive disadvantage
compared to their competitors that have less debt; and
- the ability of the Reorganized Debtors to borrow additional funds
may be limited.
The covenants in the Exit Facility and the New Senior Notes may also
restrict the Reorganized Debtors' flexibility. Such covenants may place
restrictions on the ability of the Reorganized Debtors to incur indebtedness;
pay dividends and make other restricted payments or investments; sell assets;
make capital expenditures; engage in certain mergers and acquisitions; and
refinance existing indebtedness.
Additionally, there may be factors beyond the control of the Reorganized
Debtors that could impact their ability to meet debt service requirements. The
ability of the Reorganized Debtors to meet debt service requirements will depend
on their future performance, which, in turn, will depend on conditions in the
global markets for their products, the global economy generally and other
factors that are beyond their control. The Debtors can provide no assurance that
the businesses of the Reorganized Debtors will generate sufficient cash flow
from operations or that future borrowings will be available in amounts
sufficient to enable the Reorganized Debtors to pay their indebtedness or to
fund their other liquidity needs. Moreover, the Reorganized Debtors may need to
refinance all or a portion of their indebtedness on or before maturity. The
Debtors cannot make assurances that the Reorganized Debtors will be able to
refinance any of their indebtedness on commercially reasonable terms or at all.
If the Reorganized Debtors are unable to make scheduled debt payments or comply
with the other provisions of their debt instruments, their various lenders will
be permitted under certain
76
circumstances to accelerate the maturity of the indebtedness owing to them and
exercise other remedies provided for in those instruments and under applicable
law.
M. Litigation. The Reorganized Debtors will be subject to various claims
and legal actions arising in the ordinary course of their businesses. The
Debtors are not able to predict the nature and extent of any such claims and
actions and cannot guarantee that the ultimate resolution of such claims and
actions will not have a material adverse effect on the Reorganized Debtors.
N. Adverse Publicity. Adverse publicity relating to the Reorganized
Debtors, in connection with the Debtors' Chapter 11 cases, may negatively impact
the Debtors' efforts to establish and promote name recognition and a positive
image.
O. Certain Tax Considerations. There are a number of income tax
considerations, risks and uncertainties associated with consummation of the
Plan. Interested parties should read carefully the discussions set forth in
Article IX regarding certain U.S. income tax consequences of the transactions
proposed by the Plan to the Debtors and the Reorganized Debtors and to holders
of Claims who are entitled to vote to accept or reject the Plan.
ARTICLE VIII
APPLICABILITY OF FEDERAL AND OTHER SECURITIES LAWS
It is not currently expected that any registration statement will be filed
under the Securities Act or any state securities laws with respect to the
issuance or distribution of the New Amcast Common Stock under the Plan or their
subsequent transfer or resale. The Debtors believe that, subject to certain
exceptions described below, various provisions of the Securities Act, the
Bankruptcy Code and state securities laws exempt from federal and state
securities registration requirements (a) the offer and the sale of such
securities pursuant to the Plan and (b) subsequent transfers of such securities.
A. Offer and Sale of New Securities Pursuant to the Plan: Bankruptcy Code
Exemption From Registration Requirements. Holders of certain Allowed Claims will
receive New Amcast Common Stock pursuant to the Plan. Section 1145(a)(1) of the
Bankruptcy Code exempts the offer or sale of securities under a plan of
reorganization from registration under Section 5 of the Securities Act and state
laws if three principal requirements are satisfied: (1) the securities must be
issued "under a plan" of reorganization by the debtor or its successor under a
plan or by an affiliate participating in a joint plan of reorganization with the
debtor; (2) the recipients of the securities must hold a prepetition or
administrative expense claim against the debtor or an interest in the debtor;
and (3) the securities must be issued entirely in exchange for the recipient's
claim against or interest in the debtor, or "principally" in such exchange and
"partly" for cash or property. In reliance upon this exemption, the Debtors
believe that the offer and sale of the New Amcast Common Stock under the Plan
will be exempt from registration under the Securities Act and state securities
laws.
In addition, the Debtors will seek to obtain, as part of the Confirmation
Order, a provision confirming such exemption. Accordingly, such securities may
be resold without registration
77
under the Securities Act or other federal securities laws pursuant to an
exemption provided by Section 4(1) of the Securities Act, unless the holder is
an "underwriter" (see discussion below) with respect to such securities, as that
term is defined under the Bankruptcy Code. In addition, such securities
generally may be resold without registration under state securities or "blue
sky" laws pursuant to various exemptions provided by the respective laws of the
several states. However, recipients of securities issued under the Plan are
advised to consult with their own legal advisors as to the availability of any
such exemption from registration under state law in any given instance and as to
any applicable requirements or conditions to such availability.
B. Subsequent Transfers of New Amcast Common Stock. Section 1145(b) of the
Bankruptcy Code defines the term "underwriter" for purposes of the Securities
Act as one who, except with respect to "ordinary trading transactions" of an
entity that is not an "issuer," (1) purchases a claim against, interest in, or
claim for an administrative expense in the case concerning, the debtor, if such
purchase is with a view to distributing any security received in exchange for
such a claim or interest; (2) offers to sell securities offered or sold under a
plan for the holders of such securities; (3) offers to buy securities offered or
sold under the plan from the holders of such securities, if the offer to buy is:
(a) with a view to distribution of such securities; and (b) under an agreement
made in connection with the plan, with the consummation of the plan, or with the
offer or sale of securities under the plan; or (4) is an "issuer" with respect
to the securities, as the term "issuer" is defined in Section 2(11) of the
Securities Act.
The term "issuer" is defined in Section 2(4) of the Securities Act;
however, the reference contained in Section 1145(b)(1)(D) of the Bankruptcy Code
to Section 2(11) of the Securities Act purports to include as statutory
underwriters all persons who, directly or indirectly, through one or more
intermediaries, control, are controlled by, or are under common control with, an
issuer of securities. "Control" (as such term is defined in Rule 405 of
Regulation C under the Securities Act) means the possession, direct or indirect,
of the power to direct or cause the direction of the policies of a person,
whether through the ownership of voting securities, by contract, or otherwise.
Accordingly, an officer or director of a reorganized debtor (or its successor)
under a plan of reorganization may be deemed to be a "control person,"
particularly if such management position is coupled with the ownership of a
significant percentage of the debtor's (or successor's) voting securities.
Moreover, the legislative history of Section 1145 of the Bankruptcy Code
suggests that a creditor who owns at least 10% of the securities of a
reorganized debtor may be presumed to be a "control person."
To the extent that persons deemed to be "underwriters" receive New Amcast
Common Stock pursuant to the Plan, resales by such persons would not be exempted
by Section 1145 of the Bankruptcy Code from registration under the Securities
Act or other applicable law. Such persons would not be permitted to resell such
New Amcast Common Stock unless such securities were registered under the
Securities Act or an exemption from such registration requirements were
available.
Pursuant to the Plan, certificates evidencing New Amcast Common Stock
received by a holder of 10% or more of the New Amcast Common Stock issued under
the Plan will bear a legend substantially in the form below:
78
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF
ANY STATE OR OTHER JURISDICTION AND MAY NOT BE SOLD, OFFERED FOR SALE, OR
OTHERWISE TRANSFERRED UNLESS REGISTERED OR QUALIFIED UNDER SAID ACT AND
APPLICABLE STATE SECURITIES LAWS OR UNLESS THE COMPANY RECEIVES AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO IT THAT SUCH REGISTRATION OR QUALIFICATION IS
NOT REQUIRED.
Whether or not any particular person would be deemed to be an
"underwriter" with respect to the New Amcast Common Stock to be issued pursuant
to the Plan would depend upon various facts and circumstances applicable to that
person. Accordingly, Amcast expresses no view as to whether any such person
would be such an "underwriter." PERSONS WHO RECEIVE NEW AMCAST COMMON STOCK
UNDER THE PLAN ARE URGED TO CONSULT THEIR OWN LEGAL ADVISOR WITH RESPECT TO THE
RESTRICTIONS APPLICABLE TO THE RESALE OF SUCH SHARES.
THE FOREGOING SUMMARY DISCUSSION IS GENERAL IN NATURE AND HAS BEEN
INCLUDED IN THIS DISCLOSURE STATEMENT SOLELY FOR INFORMATIONAL PURPOSES. THE
DEBTORS MAKE NO REPRESENTATIONS CONCERNING, AND DO NOT HEREBY PROVIDE, ANY
OPINIONS OR ADVICE WITH RESPECT TO THE NEW AMCAST COMMON STOCK OR THE BANKRUPTCY
MATTERS DESCRIBED HEREIN. IN LIGHT OF THE UNCERTAINTY CONCERNING THE
AVAILABILITY OF EXEMPTIONS FROM THE RELEVANT PROVISIONS OF FEDERAL AND STATE
SECURITIES LAWS, THE DEBTORS ENCOURAGE EACH CREDITOR AND PARTY-IN-INTEREST TO
CONSIDER CAREFULLY AND CONSULT WITH ITS OWN LEGAL ADVISORS WITH RESPECT TO ALL
SUCH MATTERS. BECAUSE OF THE COMPLEX, SUBJECTIVE NATURE OF THE QUESTION OF
WHETHER A PARTICULAR HOLDER MAY BE AN UNDERWRITER, THE DEBTORS MAKE NO
REPRESENTATION CONCERNING THE ABILITY OF A PERSON TO DISPOSE OF THE NEW AMCAST
COMMON STOCK.
ARTICLE IX
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN
A. Certain U.S. Federal Income Tax Consequences of the Plan. THE FOLLOWING
DISCUSSION SUMMARIZES CERTAIN ANTICIPATED U.S. FEDERAL INCOME TAX CONSEQUENCES
OF THE TRANSACTIONS PROPOSED BY THE PLAN TO CERTAIN DEBTORS AND HOLDERS OF
CLAIMS THAT ARE ENTITLED TO VOTE TO ACCEPT OR REJECT THE PLAN. THIS SUMMARY IS
PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND IS BASED ON THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED (THE "CODE"), TREASURY REGULATIONS PROMULGATED
THEREUNDER, JUDICIAL AUTHORITIES, AND CURRENT ADMINISTRATIVE RULINGS AND
PRACTICE, ALL AS IN EFFECT AS OF THE DATE HEREOF AND ALL OF WHICH ARE SUBJECT TO
CHANGE, POSSIBLY WITH RETROACTIVE EFFECTS
79
THAT COULD ADVERSELY AFFECT THE U.S. FEDERAL INCOME TAX CONSEQUENCES DESCRIBED
BELOW.
THIS SUMMARY DOES NOT ADDRESS ALL ASPECTS OF U.S. FEDERAL INCOME TAXATION
THAT MAY BE RELEVANT TO A PARTICULAR HOLDER OF A CLAIM IN LIGHT OF ITS
PARTICULAR FACTS AND CIRCUMSTANCES OR TO CERTAIN TYPES OF HOLDERS OF CLAIMS
SUBJECT TO SPECIAL TREATMENT UNDER THE CODE (FOR EXAMPLE, NON U.S. TAXPAYERS,
FINANCIAL INSTITUTIONS, BROKER DEALERS, LIFE INSURANCE COMPANIES, TAX EXEMPT
ORGANIZATIONS, AND THOSE HOLDING CLAIMS THROUGH A PARTNERSHIP OR OTHER
PASSTHROUGH ENTITY). IN ADDITION, THIS SUMMARY DOES NOT DISCUSS ANY ASPECTS OF
STATE, LOCAL, OR NON U.S. TAXATION AND DOES NOT ADDRESS THE U.S. FEDERAL INCOME
TAX CONSEQUENCES TO HOLDERS OF CLAIMS THAT ARE UNIMPAIRED UNDER THE PLAN OR
HOLDERS OF CLAIMS THAT ARE NOT ENTITLED TO RECEIVE OR RETAIN ANY PROPERTY UNDER
THE PLAN.
A SUBSTANTIAL AMOUNT OF TIME MAY ELAPSE BETWEEN THE DATE OF THIS
DISCLOSURE STATEMENT AND THE RECEIPT OF A FINAL DISTRIBUTION UNDER THE PLAN.
EVENTS SUBSEQUENT TO THE DATE OF THIS DISCLOSURE STATEMENT, SUCH AS ADDITIONAL
TAX LEGISLATION, COURT DECISIONS, OR ADMINISTRATIVE CHANGES, COULD AFFECT THE
U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN AND THE TRANSACTIONS
CONTEMPLATED THEREUNDER. NO RULING WILL BE SOUGHT FROM THE INTERNAL REVENUE
SERVICE (THE "IRS") WITH RESPECT TO ANY OF THE TAX ASPECTS OF THE PLAN AND NO
OPINION OF COUNSEL HAS BEEN OR WILL BE OBTAINED BY AMCAST WITH RESPECT THERETO.
ACCORDINGLY, EACH HOLDER OF A CLAIM IS STRONGLY URGED TO CONSULT ITS TAX ADVISOR
REGARDING THE U.S. FEDERAL, STATE, LOCAL, AND NON U.S. TAX CONSEQUENCES OF THE
PLAN TO SUCH HOLDER.
1. U.S. Federal Income Tax Consequences to Certain Debtors.
(a) Cancellation of Indebtedness Income. Under the Code, a
U.S. taxpayer generally must include in gross income the amount of
any discharged indebtedness ("COD") realized during the taxable
year. COD income generally equals the difference between the
"adjusted issue price" of the indebtedness discharged and the sum of
the amount of cash, the "issue price" of any debt instruments and
the fair market value of any other property transferred in
satisfaction of such discharged indebtedness. COD income also
includes any interest that has been previously accrued and deducted
but remains unpaid at the time the indebtedness is discharged.
The Debtors will not include such COD income in gross income,
however, because (i) the indebtedness will be discharged while the
Debtors are under the jurisdiction of a court in a Title 11 case,
and (ii) the indebtedness will be discharged either by court order
or pursuant to a plan approved of by the court.
80
Instead, certain Debtors will be required to reduce certain tax
attributes (e.g., net operating loss and net operating loss
carryovers (collectively, "NOLs"), general business credit
carryovers, minimum tax credit, capital loss carryovers, tax basis
in property and foreign tax credit carryovers, (collectively, "Tax
Attributes")) by the amount of the COD income that would otherwise
have been required to be included in gross income. Reduction of tax
basis in property is limited to the excess of the aggregate tax
bases of the relevant Debtor's property over the aggregate of such
Debtor's liabilities immediately after the discharge.
In the case of affiliated corporations filing a consolidated
return (such as the Debtors), the attribute reduction rules apply
first to the separate attributes of the particular corporation whose
debt is being discharged, and then to certain attributes of the
entire group without regard to the identity of the particular
debtor. Accordingly, COD income of the Debtors will result first in
reduction of any consolidated NOLs and other attributes, including
asset basis, attributable to the Debtors (and their subsidiaries),
and then of consolidated NOLs attributable to other members of the
consolidated group, after use of any such NOLs to determine the
consolidated group's taxable income for the tax year in which the
debt is discharged.
The Debtors have yet to determine the amount (if any) of NOLs
or other Tax Attributes that would remain after reduction of those
NOLs or other Tax Attributes by COD income as more fully described
above.
(b) Utilization of NOLs and Net Unrealized Built in Losses and
Built-in Gains. In general, when a corporation undergoes an
"ownership change," Section 382 of the Code limits the corporation's
ability to utilize current net operating losses (the "Section 382
Limitation"). In addition, if the corporation has a net unrealized
built-in loss in its assets (i.e., losses or deductions economically
accrued but unrecognized as of the date of the ownership change) in
excess of a threshold amount, the Section 382 Limitation can also
limit a corporation's use over the five-year period following an
ownership change of (a) loss deductions from the sale of certain
assets, (b) certain deprecation deductions and (c) additional
deductions that economically accrued but are unrecognized as of the
date of the "ownership change" ("Built-in Losses").
On the other hand, if a corporation has a net unrealized
built-in gain in its assets (i.e. gains or income economically
accrued but unrecognized as of the date of the ownership change) in
excess of a threshold amount, the Section 382 Limitation can be
increased during the five-year period following the ownership change
by (a) gains arising from the sale of certain assets and (b) income
that was economically accrued but unrecognized as of the date of the
ownership change ("Built-in Gains"). In 2003, the Internal Revenue
Service issued favorable guidance which permits corporations with a
net unrealized built-in gain to elect to increase the Section 382
Limitation during the five-year period following the ownership
change by certain hypothetical cost recovery deductions attributable
to
81
certain built-in gain assets held on the date of the ownership
change, even though those assets are not disposed of by the
corporation.
An "ownership change" may arise in one of two situations.
First, Amcast believes that an "ownership change" may have occurred
immediately after the Petition was filed. Second, an ownership
change will occur upon consummation of the Plan.
If an "ownership change" occurred immediately after the
Petition was filed, the annual use of Amcast's NOLs will be limited
by the Section 382 Limitation to a small percentage of the aggregate
value of the Amcast shares at that time. If an ownership change
occurs only on consummation of the Plan, the annual use of Amcast's
NOLs will be limited by the Section 382 Limitation to a small
percentage of the lower of (i) the aggregate value of the Amcast
shares immediately after such ownership change or (ii) the gross
value of Amcast's consolidated assets immediately before such
ownership change. The percentage applied against the appropriate
value of the Amcast shares is the applicable long-term tax exempt
rate, as issued by the Internal Revenue Service. The applicable
rates for December 2004 and April 2005 are 4.27% and 4.20%,
respectively. Subject to an increase in the Section 382 Limitation
for Built-in Gains (see discussion above), if any, the product of
the applicable percentage and the appropriate value of Amcast shares
is the maximum amount of Amcast's NOLs that can be used annually
until those NOLs expire.
The aggregate value of the Amcast shares immediately after the
Petition was filed will be less than the value of such shares on the
future consummation of the Plan. Accordingly, if an ownership change
is deemed to occur immediately after the Petition was filed, the
future use of the NOLs depreciation and certain other deductions
will be severely limited. If, nonetheless, the ownership change
occurred only on the consummation of the Plan, the future use of tax
attributes can also be severely limited, depending on the then value
of the Amcast shares.
(c) U.S. Federal Alternative Minimum Tax. For purposes of
computing the Debtors' regular tax liability, all of its taxable
income recognized in a taxable year generally may be offset by NOLs
(to the extent permitted under the Code and subject to various
limitations, including the Section 382 Limitation, as discussed
above). Even if all of the Debtors' regular tax liability for a
given year is reduced to zero by virtue of its NOLs, the Debtors may
still be subject to the alternative minimum tax (the "AMT"). The AMT
imposes a tax equal to the amount by which twenty percent (20%) of a
corporation's alternative minimum taxable income ("AMTI") exceeds
the corporation's regular tax liability. AMTI is calculated pursuant
to specific rules in the Code which change, limit or eliminate the
availability of certain tax deductions (including AMT NOLs) and
which include as income certain amounts not generally included in
computing the corporation's regular tax liability (any COD income
excluded from the Debtors' regular taxable income, as described
above, would also be excluded from their AMTI).
82
AMT NOL carryovers are subject to attribute reduction as
described above in "Cancellation of Indebtedness Income," and AMT
NOLs and recognized AMT Built-in Losses are subject to limitations
under Section 382 as described above in "Utilization of NOLs and Net
Unrealized Built in Losses and Built-in Gains."
2. U.S. Federal Income Tax Consequences to Certain Claim Holders.
(a) Holders of Prepetition Secured Lender Claims (Class 2).
Amcast believes that receipt of the New Senior Notes and New Amcast
Common Stock should be treated as a taxable exchange for U.S.
federal income tax purposes. Amcast further believes that the New
Senior Notes will be treated as issued with original issue discount
("OID") to the extent that their "stated redemption price at
maturity" exceeds their "issue price."
Amcast believes that a holder of a Prepetition Secured Lender Claim
should recognize gain or loss for U.S. federal income tax purposes
in an amount equal to the difference, if any, between (1) the sum of
(a) the issue price of the Term Note A, (b) the issue price of the
Term Note B and (c) the fair market value of the New Amcast Common
Stock, all received in respect of its Prepetition Secured Lender
Claim, and (2) the holder's adjusted tax basis in its Prepetitioned
Secured Lender Claim. Amcast believes that any such recognized gain
or loss will generally be capital gain or loss if a holder of such
Prepetition Secured Lender Claim held such claim as a capital asset
for U.S. federal income tax purposes and will be long term capital
gain or loss if the holder's holding period for such claim exceeded
one year as of the Effective Date.
OID. Subject to the discussion of Applicable High Yield Discount
Obligations ("AHYDO") below, Amcast believes that a holder of a debt
instrument that bears OID is required to include in gross income an
amount equal to the sum of the daily portions of OID for each day
during the taxable year in which the debt instrument is held. The
daily portions of OID are determined by allocating to each day in an
accrual period the pro rata portion of the OID that is considered
allocable to the accrual period. The amount of OID that is allocable
to an accrual period is generally equal to the product of (1) the
adjusted issue price of the Term Note A or Term Note B (including
any "payment-in-kind" ("PIK") interest) at the beginning of the
accrual period increased by prior accruals of OID and decreased by
prior cash payments and (2) their respective yields-to-maturity (the
discount rate which, when applied to all payments under the Term
Note A or Term Note B results in a present value equal to the issue
price of those Notes). If a debt instrument is issued without OID,
then a holder would include "qualified stated interest" in income
under the holder's regular method of accounting.
The general effect of the OID rules is that holders may be required
to include OID in income in advance of the receipt of cash in
respect of such income.
83
AHYDO. The Term Note B may constitute "applicable high yield
discount obligations", commonly referred to as AHYDOs. The Term Note
B will constitute AHYDOs if they have a yield to maturity that is at
least five percentage points above the applicable federal rate as of
the Effective Date and they are issued with "significant original
issue discount". The Term Note B will be treated as having
significant original issue discount if the aggregate amount that
will be includible in gross income with respect to such notes for
periods before the close of any accrual period ending after the date
that is five years after the date of issue exceeds the sum of (1)
the aggregate amount of interest to be paid in cash under the Term
Notes B before the close of the accrual period and (2) the product
of the initial issue price of the Term Note B and their yield to
maturity.
If the Term Note B constitute AHYDOs, the Debtors will not be
allowed an interest deduction for OID accrued on those Notes until
such time as they actually pay such OID. For this purpose, the
issuance of additional PIK Notes will not be treated as the actual
payment of OID. Moreover, a portion of the interest deduction for
accrued OID will be permanently disallowed, if the Term Note B have
a yield to maturity that exceeds the applicable federal rate plus
six percentage points. The AHYDO rules generally do not affect the
amount, timing or character of a holder's income. However, a
domestic corporate holder may be treated as receiving a dividend in
the amount of such disallowed portion allocable to the holder and be
eligible for the dividends received deduction.
(b) Holders of Other Secured Claims (Class 3). Holders of
Other Secured Claims who receive the collateral securing such Other
Secured Claim upon consummation of the Plan generally will be
required to recognize gain or loss for U.S. federal income tax
purposes equal to the difference between such holder's adjusted tax
basis, if any, in the Other Secured Claim and the fair market value
of the collateral received in exchange therefor. Holders of Other
Secured Claims who receive deferred cash payments may be able to
report gain from such cash payments under the installment method,
which generally results in the recognition of gain as the deferred
cash payments are received, unless such holder affirmatively elects
out of the installment method. Holders of Other Secured Claims who
receive deferred cash payments should recognize loss on the
Effective Date equal to the difference between such holder's
adjusted tax basis, if any, in the Other Secured Claim and the fair
market value of the deferred cash payments. Holders of Other Secured
Claims who receive cash deferred payments should consult their tax
advisor regarding the availability and application of the
installment method.
The consummation of the Plan generally should not be a taxable
event for holders of Other Secured Claims whose legal, equitable and
contractual rights are Reinstated pursuant to the Plan. Taxable
income, however, may be recognized by those holders if they are
considered to receive interest, damages or other income in
connection with the Reinstatement or if the Reinstatement is
considered for tax purposes to be a substantial modification of the
Claim.
84
Consideration received by holders of Other Secured Claims
will, pursuant to the Plan, be allocated first to the principal
amount of such Claim as determined for U.S. federal income tax
purposes and then to accrued interest, if any, with respect to such
Claim. Holders of Other Secured Claims should include the portion,
if any, of the consideration received which is allocable to accrued
interest as ordinary income, to the extent not previously included
in income.
(c) Holders of General Unsecured Claims (Class 5). A holder of
General Unsecured Claims who will receive cash under the terms of
the Plan, should generally recognize gain or loss for U.S. federal
income tax purposes in an amount equal to the difference, if any,
between (1) the amount of cash received and (2) the holder's
adjusted tax basis in such Claims. Any such recognized gain or loss
will be capital or ordinary depending on the status of the Claim in
the holder's hands, including whether or not the Claim constitutes a
market discount bond in the holder's hands.
(d) Bad Debt Deduction. A holder who, under the Plan, receives
in respect of a Claim an amount less than the holder's tax basis in
the Claim may be entitled in the year of receipt (or in an earlier
year) to a bad debt deduction in some amount under Section 166 of
the Code. The rules governing the character timing and amount of bad
debt deductions place considerable emphasis on the facts and
circumstances of the holder, the obligor and the instrument with
respect to which a deduction is claimed. Holders of Claims,
therefore, are urged to consult their tax advisors with respect to
their ability to take such a deduction.
3. Information Reporting and Backup Withholding. Certain payments,
including certain payments of Claims pursuant to the Plan, payments of
interest on the New Senior Notes, payments of dividends, if any, on the
New Amcast Common Stock and the proceeds from the sale or other taxable
disposition of the New Amcast Common Stock, may be subject to information
reporting to the IRS. Moreover, such reportable payments may be subject to
backup withholding unless the taxpayer: (i) comes within certain exempt
categories (which generally include corporations) and, when required,
demonstrates this fact or (ii) provides a correct taxpayer identification
number and certifies under penalty of perjury that the taxpayer
identification number is correct and that the taxpayer is not subject to
backup withholding because of a failure to report all dividend and
interest income.
4. Importance of Obtaining Professional Tax Assistance. THE
FOREGOING DISCUSSION IS INTENDED ONLY AS A SUMMARY OF CERTAIN U.S. FEDERAL
INCOME TAX CONSEQUENCES OF THE PLAN AND IS NOT A SUBSTITUTE FOR CAREFUL
TAX PLANNING WITH A TAX PROFESSIONAL. THE FOREGOING SUMMARY IS NOT BINDING
ON ANY HOLDER AND THE FAILURE TO OBJECT TO THIS SUMMARY IS NOT AN
ADMISSION BY ANY HOLDER. THE ABOVE DISCUSSION IS FOR INFORMATIONAL
PURPOSES ONLY AND IS NOT TAX ADVICE. THE TAX CONSEQUENCES ARE IN MANY
CASES UNCERTAIN AND MAY VARY DEPENDING ON A HOLDER'S INDIVIDUAL
CIRCUMSTANCES. ACCORDINGLY, HOLDERS SHOULD
85
CONSULT THEIR TAX ADVISORS ABOUT THE U.S. FEDERAL, STATE, LOCAL AND NON
U.S. INCOME AND OTHER TAX CONSEQUENCES OF THE PLAN.
ARTICLE X
FEASIBILITY OF THE PLAN AND BEST INTERESTS OF CREDITORS
A. Feasibility of the Plan. In connection with confirmation of the Plan,
the Bankruptcy Court will be required to determine that the Plan is feasible
pursuant to Section 1129(a)(11) of the Bankruptcy Code, which means that the
confirmation of the Plan is not likely to be followed by the liquidation or the
need for further financial reorganization of the Debtors.
To support their belief in the feasibility of the Plan, the Debtors have
relied upon the Projections, which are annexed to this Disclosure Statement as
Appendix B.
The Projections indicate that the Reorganized Debtors should have
sufficient cash flow to pay and service their debt obligations and to fund their
operations. Accordingly, the Debtors believe that the Plan complies with the
financial feasibility standard of Section 1129(a)(11) of the Bankruptcy Code.
The Projections are based upon numerous assumptions that are an integral
part of the Projections, including, without limitation, confirmation and
consummation of the Plan in accordance with its terms; realization of the
Debtors' operating strategy for the Reorganized Debtors; industry performance;
no material adverse changes in applicable legislation or regulations, or the
administration thereof, including environmental legislation or regulations,
exchange rates or generally accepted accounting principles; general business and
economic conditions; competition; adequate financing; absence of material
contingent or unliquidated litigation, indemnity or other claims; and other
matters, many of which will be beyond the control of the Reorganized Debtors and
some or all of which may not materialize. To the extent that the assumptions
inherent in the Projections are based upon future business decisions and
objectives, they are subject to change. In addition, although they are presented
with numerical specificity and the assumptions on which they are based are
considered reasonable by the Debtors, the assumptions and estimates underlying
the Projections are subject to significant business, economic and competitive
uncertainties and contingencies, many of which will be beyond the control of the
Reorganized Debtors. Accordingly, the Projections are only an estimate that are
necessarily speculative in nature. It can be expected that some or all of the
assumptions in the Projections will not be realized and that actual results will
vary from the Projections, which variations may be material and are likely to
increase over time. The Projections should therefore not be regarded as a
representation by the Debtors or any other Person that the results set forth in
the Projections will be achieved. In light of the foregoing, readers are
cautioned not to place undue reliance on the Projections. The projected
financial information contained herein should not be regarded as a
representation or warranty by the Debtors, the Debtors' advisors or any other
Person that the Projections can or will be achieved. The Projections should be
read together with the information in Article VII of this Disclosure Statement
entitled "Certain Risk Factors to be Considered," which sets forth important
factors that could cause actual results to differ from those in the Projections.
86
The Debtors do not intend to update or otherwise revise the Projections,
including any revisions to reflect events or circumstances existing or arising
after the date of this Disclosure Statement or to reflect the occurrence of
unanticipated events, even if any or all of the underlying assumptions do not
come to fruition. Furthermore, the Debtors do not intend to update or revise the
Projections to reflect changes in general economic or industry conditions.
B. Acceptance of the Plan. As a condition to Confirmation, the Bankruptcy
Code requires that each Class of Impaired Claims vote to accept the Plan, except
under certain circumstances.
Section 1126(c) of the Bankruptcy Code defines acceptance of a plan by a
class of impaired claims as acceptance by holders of at least two-thirds (2/3)
in dollar amount and more than one-half (1/2) in number of claims in that class,
but for that purpose counts only those who actually vote to accept or to reject
the Plan. Thus, holders of Claims in each of Classes 2, 3, 4 and 5 will have
voted to accept the Plan only if two-thirds (2/3) in dollar amount and a
majority in number of the Claims actually voting in each Class cast their
ballots in favor of acceptance. Holders of Claims who fail to vote are not
counted as either accepting or rejecting the Plan.
C. Best Interests Test. As noted above even if a plan is accepted by each
class of claims and interests the Bankruptcy Code requires a bankruptcy court to
determine that the plan is in the best interests of all holders of claims or
interests that are impaired by the plan and that have not accepted the plan. The
"best interests" test, as set forth in Section 1129(a)(7) of the Bankruptcy
Code, requires a bankruptcy court to find either that all members of an impaired
class of claims or interests have accepted the plan or that the plan will
provide a member who has not accepted the plan with a recovery of property of a
value, as of the effective date of the plan, that is not less than the amount
that such holder would recover if the debtor were liquidated under Chapter 7 of
the Bankruptcy Code.
To calculate the probable distribution to holders of each impaired class
of claims and interests if the debtor were liquidated under Chapter 7, a
bankruptcy court must first determine the aggregate dollar amount that would be
generated from the debtor's assets if its Chapter 11 case were converted to a
Chapter 7 case under the Bankruptcy Code. This "liquidation value" would consist
primarily of the proceeds from a forced sale of the debtor's assets by a Chapter
7 trustee.
The amount of liquidation value available to unsecured creditors would be
reduced by, first, the claims of secured creditors to the extent of the value of
their collateral and, second, by the costs and expenses of liquidation, as well
as by other administrative expenses and costs of both the Chapter 7 case and the
Chapter 11 case. Costs of liquidation under Chapter 7 of the Bankruptcy Code
would include the compensation of a trustee, as well as of counsel and other
professionals retained by the trustee, asset disposition expenses, all unpaid
expenses incurred by the debtors in its Chapter 11 case (such as compensation of
attorneys, financial advisors and accountants) that are allowed in the Chapter 7
cases, litigation costs and claims arising from the operations of the debtor
during the pendency of the Chapter 11 case. The liquidation itself would trigger
certain priority payments that otherwise would be due in the ordinary course of
business. Those priority claims would be paid in full from the liquidation
proceeds before the balance would be made available to pay general unsecured
claims or to make any distribution in
87
respect of equity security interests. The liquidation would also prompt the
rejection of a large number of executory contracts and unexpired leases and
thereby significantly enlarge the total pool of unsecured claims by reason of
resulting rejection damages claims.
Once the bankruptcy court ascertains the recoveries in liquidation of
secured creditors and priority claimants, it must determine the probable
distribution to general unsecured creditors and equity security holders from the
remaining available proceeds in liquidation. If such probable distribution has a
value greater than the distributions to be received by such creditors and equity
security holders under the plan, then the plan is not in the best interests of
creditors and equity security holders.
D. Liquidation Analysis. For purposes of the Best Interests Test, in order
to determine the amount of liquidation value available to Creditors, the
Debtors, with the assistance of their financial advisor, Glass & Associates,
Inc. ("Glass"), prepared a liquidation analysis, annexed hereto as Appendix E
(the "Liquidation Analysis"), which concludes that in a Chapter 7 liquidation,
holders of prepetition unsecured Claims would receive less of a recovery than
the recovery they would receive under the Plan and, potentially, no recovery
whatsoever. These conclusions are premised upon the assumptions set forth in
Appendix E, which the Debtors and Glass believe are reasonable.
Notwithstanding the foregoing, the Debtors believe that any Liquidation
Analysis with respect to the Debtors is inherently speculative. The Liquidation
Analysis for the Debtors necessarily contains estimates of the net proceeds that
would be received from a forced sale of assets and/or business units, as well as
the amount of Claims that would ultimately become Allowed Claims. Claims
estimates are based solely upon the Debtors' incomplete review of the Claims
filed and the Debtors' books and records. No order or finding has been entered
by the Bankruptcy Court estimating or otherwise fixing the amount of Claims at
the projected amounts of Allowed Claims set forth in the Liquidation Analysis.
In preparing the Liquidation Analysis, the Debtors have projected an amount of
Allowed Claims that represents their best estimate of the Chapter 7 liquidation
dividend to holders of Allowed Claims. The estimate of the amount of Allowed
Claims set forth in the Liquidation Analysis should not be relied on for any
other purpose, including, without limitation, any determination of the value of
any distribution to be made on account of Allowed Claims under the Plan.
E. Valuation of the Reorganized Debtors. The Debtors determined that they
should estimate the post-confirmation enterprise value of the Reorganized
Debtors (the "Reorganized Debtors' Enterprise Value") in order to equitably
allocate distributions among the various Classes of Claims. Accordingly, the
Debtors directed Glass to prepare a valuation analysis of the Reorganized
Debtors.
Glass estimates the Reorganized Debtors' Enterprise Value to be
approximately $67 million to $73 million, with a midpoint of $70 million, as of
June 30, 2005, which is the assumed Effective Date. This reorganization
enterprise value reflects, among other factors discussed below, current
financial market conditions and the inherent uncertainty today as to the
achievement of the Projections.
88
The foregoing valuation also reflects a number of assumptions, including a
successful reorganization of the Debtors' businesses and finances in a timely
manner, achieving the forecasts reflected in the Projections, the amount of
available cash, market conditions, and the Plan becoming effective in accordance
with its terms on a basis consistent with the estimates and other assumptions
discussed herein.
In preparing the estimated Reorganized Debtors Enterprise Value, Glass:
(a) reviewed certain historical financial information of the Debtors for recent
years and interim periods; (b) reviewed certain internal financial and operating
data of the Debtors and assisted in developing financial projections relating to
their businesses and prospects; (c) met with certain members of senior
management of the Debtors to discuss the Debtors' operations and future
prospects; (d) reviewed publicly available financial data and considered the
market values of public companies that Glass deemed generally comparable to the
operating businesses of the Debtors; (e) reviewed the financial terms, to the
extent publicly available, of certain acquisitions of companies that Glass
believes were comparable to the operating businesses of the Debtors; (f)
considered certain economic and industry information relevant to the Debtors'
operating businesses; (g) visited certain of the Debtors' facilities; and (h)
reviewed certain analyses prepared by other firms retained by the Debtors and
conducted such other analyses as Glass deemed appropriate. Although Glass
conducted a review and analysis of the Debtors' businesses, operating assets and
liabilities, and business plans, Glass relied on the accuracy and completeness
of all: (i) financial and other information furnished to it by the Debtors and
by other firms retained by the Debtors and (ii) publicly available information.
No independent evaluations or appraisals of the Debtors' assets were sought or
were obtained in connection therewith.
The estimates of reorganization enterprise value, including the estimated
Reorganized Debtors Enterprise Value, do not purport to be appraisals, nor do
they necessarily reflect the values that might be realized if assets were to be
sold. Such estimates were developed solely for purposes of formulation and
negotiation of the Plan and analysis of implied relative recoveries to creditors
thereunder. Such estimates reflect computations of the estimated reorganization
enterprise value of the reorganized Debtors through the application of various
valuation techniques and do not purport to reflect or constitute appraisals,
liquidation values, or estimates of the actual market value that may be realized
through the sale of any securities to be issued pursuant to the Plan, which may
be significantly different from the amounts set forth herein. The value of an
operating business is subject to uncertainties and contingencies that are
difficult to predict and will fluctuate with changes in factors affecting the
financial conditions and prospects of such a business. As a result, the estimate
of reorganization enterprise value set forth herein is not necessarily
indicative of actual outcomes, which may be significantly more or less favorable
than those set forth herein. Because such estimates are inherently subject to
uncertainties, neither the Debtors, Glass, nor any other person assumes
responsibility for their accuracy. Depending on the results of the Debtors'
operations or changes in the financial markets, Glass' valuation analysis as of
the Effective Date may differ from that disclosed herein.
Moreover, the valuation of newly-issued securities is subject to
additional uncertainties and contingencies, all of which are difficult to
predict. The Debtors' Plan contemplates that the reorganized Debtors will emerge
from bankruptcy as a private enterprise with no public market for any of the
reorganized Debtors' debt or equity securities or other financial instruments,
including those issued in conjunction with the exit financing. Actual market
prices of such
89
securities at issuance will depend upon, among other things, prevailing interest
rates; conditions in the financial markets; the anticipated initial securities
holding of prepetition creditors, some of which may prefer to liquidate their
investment rather than hold it on a long-term basis; and other factors that
generally influence the prices of securities. Actual market prices of such
securities also may be affected by the Reorganization Cases or by other factors
not possible to predict. Accordingly, the reorganization enterprise value
estimated by Glass does not necessarily reflect, and should not be construed as
reflecting, values that will be attained if any of the Debtors' securities were
to be sold, exchanged, or otherwise traded in public or private markets. The
enterprise value ascribed in the analysis does not purport to be an estimate of
the post-reorganization market trading value. Such trading value may be
materially different from the reorganization enterprise value ranges associated
with Glass' valuation analysis. Indeed, there can be no assurance that a trading
market will ever develop for the New Amcast Common Stock. The value attributed
to the New Amcast Common Stock in the Projections is derived from the midpoint
of Glass' range for the estimated Reorganized Debtors Enterprise Value.
Furthermore, in the event that the actual distributions to Claim holders
in this Chapter 11 Case differ from those assumed by the Debtors in their
recovery analysis, the actual recoveries realized by holders of Claims in the
impaired Classes could be significantly higher or lower than estimated by the
Debtors.
F. Financial Projections. The Debtors developed a set of Projections,
summarized in Appendix B hereto, to support the conclusion that holders of
Claims would receive a larger recovery under the Debtors' Plan than they would
under a liquidation of the Debtors' estates, and to determine which Claims and
Classes of Claims are Impaired. The Projections and supporting testimony thereof
help establish the feasibility of the Debtors' Plan, that the Plan is in the
best interests of all Claim Holders and that the new debt obligations to be
incurred upon emergence from this Chapter 11 Cases are necessary for the Debtors
to continue as a viable going concern.
The recoveries and Projections set forth in Appendix B are based on a
number of significant assumptions including, among other things, the Debtors'
successful reorganization, an assumed Effective Date of June 30, 2005, their
ability to achieve the operating and financial results included in the
Projections, their ability to maintain adequate liquidity to fund operations and
the assumption that capital and equity market conditions remain consistent with
current conditions.
THE PROJECTIONS ARE BASED UPON A NUMBER OF SIGNIFICANT ASSUMPTIONS. ACTUAL
OPERATING RESULTS AND VALUES MAY VARY SIGNIFICANTLY FROM THESE PROJECTIONS.
1. Financial Projections. As a condition to plan confirmation, the
Bankruptcy Code requires, among other things, the Bankruptcy Court to find
that confirmation is not likely to be followed by either a liquidation or
the need to further reorganize the Debtors. In connection with developing
the Plan, and for purposes of determining whether the Plan satisfies
feasibility standards, the Debtors' management has, through the
development of the Projections, analyzed the Reorganized Debtors' ability
to meet their obligations under the Plan to maintain sufficient liquidity
and capital
90
resources to conduct their businesses. The Projections will also assist
each holder of a Claim in determining whether to accept or reject the
Plan.
The Debtors prepared the Projections in good faith, based upon
estimates and assumptions made by the Debtors' management. These include,
but are not limited to, estimates and assumptions with respect to pricing
and sales volume by market, raw material pricing, product sourcing,
capital spending and working capital levels. The Debtors developed the
Projections over the first and second quarters of their fiscal year 2005.
The Debtors believe that, as a result of current business, economic,
competitive, regulatory, market and financial conditions, fiscal year 2005
EBITDA before reorganization costs, fresh start adjustments, and other
unusual items may be in the range of approximately $3.8 million.
The Projections include preliminary estimates of the debt discharge
and reorganization adjustments to the Debtors' financial statements
anticipated upon the Debtors' emergence from bankruptcy. The Debtors
intend to adopt the principles of "fresh start" accounting upon emergence,
consistent with the American Institute of Certified Public Accountants
Statement of Position 90-7, "Financial Reporting by Entities in
Reorganization under the Bankruptcy Code." The expected deficiency of
reorganization value relative to the fair value of the reorganized
Debtors' assets is recorded as a reduction in the value of certain
long-lived assets.
The estimates and assumptions in the Projections, while considered
reasonable by management, may not be realized, and are inherently subject
to uncertainties and contingencies. They also are based on factors such as
industry performance, general business, economic, competitive, regulatory,
market and financial conditions, all of which are difficult to predict and
generally beyond the Debtors' control. Because future events and
circumstances may well differ from those assumed and unanticipated events
or circumstances may occur, the Debtors expect that the actual and
projected results will differ and the actual results may be materially
greater or less than those contained in the Projections. No
representations can be made as to the accuracy of the Projections or the
Reorganized Debtors' ability to achieve the projected results. Therefore,
the Projections may not be relied upon as a guaranty or other assurance of
the actual results that will occur. The inclusion of the Projections
herein should not be regarded as an indication that the Debtors considered
or consider the Projections to reliably predict future performance. The
Projections are subjective in many respects, and thus are susceptible to
interpretations and periodic revisions based on actual experience and
recent developments. The Debtors do not intend to update or otherwise
revise the Projections to reflect the occurrence of future events, even in
the event that assumptions underlying the Projections are not borne out.
The Projections should be read in conjunction with the assumptions and
qualifications set forth herein.
THE DEBTORS DID NOT PREPARE THE PROJECTIONS WITH A VIEW TOWARDS
COMPLYING WITH THE GUIDELINES FOR PROSPECTIVE FINANCIAL STATEMENTS
PUBLISHED BY THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS. THE
DEBTORS' INDEPENDENT AUDITOR HAS NEITHER COMPILED NOR EXAMINED THE
ACCOMPANYING
91
PROSPECTIVE FINANCIAL INFORMATION TO DETERMINE THE REASONABLENESS THEREOF
AND, ACCORDINGLY, HAS NOT EXPRESSED AN OPINION OR ANY OTHER FORM OF
ASSURANCE WITH RESPECT THERETO.
2. Significant Assumptions. The Debtors prepared the Projections
based on, among other things, the anticipated future financial condition
and results of operations of the Reorganized Debtors.
Although the forecasts represent the best estimates of the Debtors,
for which the Debtors believe they have a reasonable basis as of the date
hereof, of the results of operations and financial position of the Debtors
after giving effect to the reorganization contemplated under the Plan,
they are only estimates and actual results may vary considerably from
forecasts. Consequently, the inclusion of the forecast information herein
should not be regarded as a representation by the Debtors, the Debtors'
advisors or any other person that the forecast results will be achieved.
The Projections were not prepared with a view toward general use,
but rather for the limited purpose of providing information in conjunction
with the Plan. Also they have been presented in lieu of pro forma
historical financial information. Reference should be made to Article VII
herein - "CERTAIN RISK FACTORS TO BE CONSIDERED" for a discussion of the
risks related to the Projections.
The Debtors believe that a reasonable estimate of the Effective Date
is June 30, 2005. If the Debtors are able to draw upon the DIP Facility as
planned, it is the Debtors' belief that the Projections will not change
materially even if the Effective Date does not occur on the assumed
Effective Date. Projected unaudited consolidated financial statements for
the Debtors are included for each twelve-month period ending August 31,
2005, 2006, 2007, and 2008.
Additional information relating to the principal assumptions used in
preparing the Projections is set forth below.
For the purpose of providing projected financial information, the
Debtors have defined their core business as the operation of aluminum
casting facilities that manufacture wheels and components for original
equipment manufacturers in the passenger car, light truck, and sport
utility vehicle segments of the automotive industry. Within this context,
the following points represent the major assumptions underlying the
Projections:
(a) Effective Date and Plan Terms. The Projections assume that
the Plan will be consummated in accordance with its terms and that
all transactions contemplated by the Plan will be consummated by the
assumed Effective Date. Any significant delay in the assumed
Effective Date of the Plan may have a significant negative impact on
the operations and financial performance of the Debtors including,
but not limited to, an increased risk of inability to meet sales
forecasts and higher reorganization expenses.
92
(b) Total Revenue. The Projections assume that total revenue
will be approximately $173 million in the fiscal year ending August
31, 2005. Total revenue for fiscal years 2006 through 2008 are
expected to increase approximately 13.4% in fiscal year 2006, 15.6%
in fiscal year 2007, and (2.7)% in fiscal year 2008. The assumed
growth is based on current releases and contracted business with the
Debtors' existing customer base, certain anticipated product pricing
and mix adjustments, and increased penetration of the Debtors'
products within its competitive markets.
(c) Cost of Sales. The Projections assume that cost of sales
as a percentage of total revenue are 94% in the year ending August
31, 2005. Cost of sales for fiscal years 2006 through 2008 as a
percentage of total revenue are expected to be 92.6% in fiscal year
2006, 90.8% in fiscal year 2007, and 89.6% in fiscal year 2008. The
assumed amounts vary as a percentage of total revenue due to changes
in product mix and improvements in the Debtors' production processes
to normalize scrap and other extraordinary manufacturing costs.
(d) SG&A Expense. The Projections assume that selling, general
and administrative ("SG&A") expense as a percentage of total revenue
is 9% in the year ending August 31, 2005. SG&A expense for fiscal
years 2006 through 2008 as a percentage of total revenue are
expected to be 5.5% in fiscal year 2006, 5.1% in fiscal year 2007,
and 5.4% in fiscal year 2008. The assumed amounts decline as a
percentage of total revenue between fiscal years 2005 and 2006 based
on the planned reduction in corporate overhead and elimination of
public company reporting requirements upon the Debtors' emergence
from bankruptcy. The assumed amounts vary from fiscal year 2006
through fiscal year 2008 due mostly to the anticipated growth in
revenue while SG&A expenses remain relatively stable.
(e) Income Taxes. For fiscal years 2006 through 2008, the
Projections assume a tax rate (federal and state combined) of 36% of
pre-tax income.
(f) Net Capital Expenditures. Net capital expenditures are
assumed to be approximately $8.7 million in fiscal year 2005, $12.9
million in fiscal year 2006, $17.1 million in fiscal year 2007, and
$11.0 million in fiscal year 2008. The capital expenditures include
spending for maintenance, expansion, and growth in support of the
Debtors' projected financial performance.
(g) Working Capital. Receivables, payables and other working
capital accounts are projected according to historical levels with
respect to total revenue, cost of sales, and SG&A expense, including
maintaining a receivables factoring program with certain large
customers.
(h) Balance Sheet Adjustments. The Debtors' Prepetition
Transaction Documents are extinguished, and exit financing including
a $42 million Term Note A, $27 million Term Note B, and $1 million
of reorganized equity are added
93
to the balance sheet. The Debtors' prepetition equity is cancelled
upon emergence.
The Projections and the foregoing assumptions are prefaced on the
successful reorganization of the Debtors' business and finances in a timely
manner, the availability of exit financing and certain tax attributes, the
outcome of certain expectations regarding market conditions and the Plan
becoming effective in accordance with its terms. Such estimates and assumptions,
while considered reasonable by management, may not be realized, and are
inherently subject to uncertainties and contingencies. Because future events and
circumstances may well differ from those assumed and unanticipated events or
circumstances may occur, the Debtors expect that the actual and projected
results will differ and the actual results may be materially greater or less
than those contained in the Projections. No representations can be made as to
the accuracy of the Projections or the Reorganized Debtors' ability to achieve
the projected results. Therefore, the Projections may not be relied upon as a
guaranty or other assurance of the actual results that will occur.
G. Application of the "Best Interests" of Creditors Test to the
Liquidation Analysis and the Valuation. Notwithstanding the difficulty in
quantifying recoveries with precision, the Debtors believe that the financial
disclosures and projections contained herein imply a greater or equal recovery
to holders of Claims in Impaired Classes than the recovery available in a
Chapter 7 liquidation. Accordingly, the Debtors believe that the "best
interests" test of Section 1129 of the Bankruptcy Code is satisfied.
H. Confirmation without Acceptance of All Impaired Classes: the "Cramdown"
Alternative. In view of the deemed rejection by holders of Claims in Classes 6,
7 and 8 the Debtors will seek confirmation of the Plan pursuant to the
"cramdown" provisions of the Bankruptcy Code. Pursuant to the Lock-Up Agreement
between the Debtors and the Prepetition Secured Creditors, said creditors in
Class 2 have agreed to vote in favor of the Plan. The Debtors further reserve
the right to seek confirmation of the Plan with respect to the Claims in Classes
3, 4, and 5 in the event the holders of such Claims vote to reject the Plan.
Specifically, Section 1129(b) of the Bankruptcy Code provides that a plan can be
confirmed even if the plan is not accepted by all impaired classes, as long as
at least one impaired class of claims has accepted it. The Bankruptcy Court may
confirm a plan at the request of the debtors if the plan "does not discriminate
unfairly" and is "fair and equitable" as to each impaired class that has not
accepted the plan. A plan does not discriminate unfairly within the meaning of
the Bankruptcy Code if a dissenting class is treated equally with respect to
other classes of equal rank.
A plan is fair and equitable as to a class of unsecured claims that
rejects a plan if the plan provides (a) for each holder of a claim included in
the rejecting class to receive or retain on account of that claim property that
has a value, as of the effective date of the plan, equal to the allowed amount
of such claim or (b) that the holder of any claim or interest that is junior to
the claims of such class will not receive or retain on account of such junior
claim or interest any property at all.
A plan is fair and equitable as to a class of equity interests that
rejects a plan if the plan provides (a) that each holder of an interest included
in the rejecting class receive or retain on account of that interest property
that has a value, as of the effective date of the plan, equal to the
94
greatest of the allowed amount of any fixed liquidation preference to which such
holder is entitled, any fixed redemption price to which such holder is entitled
or the value of such interest or (b) that the holder of any interest that is
junior to the interests of such class will not receive or retain under the plan
on account of such junior interest any property at all.
The Debtors believe that they will meet the "fair and equitable
"requirements of Section 1129(b) of the Bankruptcy Code with respect to holders
of Claims in Classes 6 and 7 and holders of Interests in Class 8 in that no
holders of junior claims or interests will receive distributions under the Plan.
As to Classes 3, 4 and 5 in the event it becomes necessary to "cramdown"
the Plan over the rejection of any such Classes, the Debtors will demonstrate at
the Confirmation Hearing that the Plan does not discriminate unfairly and is
fair and equitable with respect to such Classes. The fair and equitable test set
forth above for unsecured claims applies to Classes 4 and 5. The fair and
equitable test for secured claims, which is applicable to the Other Secured
Claims in Class 3 is that the plan provides (a) that the holders of secured
claims retain the liens in the property securing such claims to the extent of
the allowed amount of such claims, and that the holders of such claims receive
on account of such claims deferred cash payments totaling at least the allowed
amount of such claims, of a value, as of the effective date of the plan, of at
least the value of such holders' interest in the estate's interest in such
property, (b) for the sale of any property subject to the liens securing such
claims, free and clear of such liens, with the liens attaching the proceeds of
such sale, and such liened proceeds being treated either pursuant to (a) or (b),
or (c) for the realization by such holders of the indubitable equivalent of such
claims. The Debtors believe that the holders of Claims in such Classes will vote
to accept the Plan by the requisite amounts. As to Class 3, in the event any
sub-Class thereof votes against the Plan, the treatment proposed satisfies the
fair and equitable test and can be crammed down, if necessary.
ARTICLE XI
ALTERNATIVES TO CONFIRMATION AND CONSUMMATION OF THE PLAN
The Debtors believe that the Plan affords holders of Claims in Classes 2,
3, 4 and 5 the potential for the greatest realization on the Debtors' assets
and, therefore, is in the best interests of such holders. If, however, the
requisite acceptances are not received, or the Plan is not confirmed and
consummated, the theoretical alternatives include (a) formulation of an
alternative plan or plans of reorganization or (b) liquidation of the Debtors
under Chapter 7 or Chapter 11 of the Bankruptcy Code.
A. Alternative Plan(s) of Reorganization. If the requisite acceptances are
not received or if the Plan is not confirmed, the Debtors (or, if the Debtors'
exclusive periods in which to file and solicit acceptances of a plan of
reorganization have expired, any other party in interest) could attempt to
formulate and propose a different plan or plans of reorganization. Such a plan
or plans might involve either a reorganization and continuation of the Debtors'
businesses or an orderly liquidation of assets.
The Debtors believe that the Plan enables Creditors to realize the
greatest possible value under the circumstances, and, has the greatest chance to
be confirmed and consummated.
95
B. Liquidation under Chapter 7 or Chapter 11. If no plan is confirmed, the
Debtors' cases may be converted to cases under Chapter 7 of the Bankruptcy Code,
pursuant to which a trustee would be elected or appointed to liquidate the
Debtors' assets for distribution in accordance with the priorities established
by the Bankruptcy Code. It is impossible to predict precisely how the proceeds
of the liquidation would be distributed to the respective holders of Claims
against or Interests in the Debtors.
The Debtors believe that in a liquidation under Chapter 7, additional
administrative expenses involved in the appointment of a trustee or trustees and
attorneys, accountants and other professionals to assist such trustees would
cause a substantial diminution in the value of the Debtors' Estates. The assets
available for distribution to Creditors would be reduced by such additional
expenses and by Claims, some of which would be entitled to priority, arising by
reason of the liquidation and from the rejection of leases and other executory
contracts in connection with the cessation of operations and the failure to
realize the greater going concern value of the Debtors' assets. More
importantly, as set forth in Appendix E, conversion to a Chapter 7 liquidation
would likely result in the immediate cessation of the Debtors' businesses, as
most Chapter 7 trustees are disinclined to continue operations.
The Debtors could also be liquidated pursuant to the provisions of a
Chapter 11 plan of reorganization. In a liquidation under Chapter 11, the
Debtors' assets could theoretically be sold in an orderly fashion over a more
extended period of time than in a liquidation under Chapter 7, thus resulting in
a potentially greater recovery. Conversely, to the extent the Debtors'
businesses incur operating losses, the Debtors efforts to liquidate their assets
over a longer period of time could theoretically result in a lower net
distribution to Creditors than they would receive through a Chapter 7
liquidation. Nevertheless, because there would be no need to appoint a Chapter 7
trustee and hire new professionals, a Chapter 11 liquidation might be less
costly than a Chapter 7 liquidation and thus provide larger net distributions to
Creditors than in a Chapter 7 liquidation. Any recovery in a Chapter 11
liquidation, while potentially greater than in a Chapter 7 liquidation, would
also be highly uncertain.
Although preferable to a Chapter 7 liquidation, the Debtors believe that
any alternative liquidation under Chapter 11 is a much less attractive
alternative to Creditors than the Plan because of the greater return anticipated
by the Plan.
ARTICLE XII
THE SOLICITATION; VOTING PROCEDURES
A. Parties in Interest Entitled to Vote. In general, a holder of a claim
or interest may vote to accept or to reject a plan if (a) the claim or interest
is "Allowed," which means generally that no party in interest has objected to
such claim or interest, and (b) the claim or interest is "Impaired" by the plan.
Under Section 1124 of the Bankruptcy Code, a class of claims or interests
is deemed to be "Impaired" under a plan unless (a) the plan leaves unaltered the
legal, equitable and contractual rights to which such claim or interest entitles
the holder thereof or (b) notwithstanding any legal right to an accelerated
payment of such claim or interest, the plan
96
cures all existing defaults (other than defaults resulting from the occurrence
of events of bankruptcy) and reinstates the maturity of such claim or interest
as it existed before the default.
If, however, the holder of an impaired claim or interest will not receive
or retain any distribution under the plan on account of such claim or interest,
the Bankruptcy Code deems such holder to have rejected the plan and,
accordingly, holders of such claims and interests do not actually vote on the
plan. If a claim or interest is not impaired by the plan, the Bankruptcy Code
deems the holder of such claim or interest to have accepted the plan and,
accordingly, holders of such claims and interests are not entitled to vote on
the plan.
B. Classes Entitled to Vote to Accept or Reject the Plan. Holders of
Claims in Classes 2, 3, 4 and 5 are entitled to vote to accept or reject the
Plan. By operation of law, each unimpaired Class of Claims is deemed to have
accepted the Plan and each impaired Class of Claims or Interests that will
receive nothing under the Plan is deemed to have rejected the Plan and,
therefore, the holders of Claims or Interests in such Classes are not entitled
to vote to accept or reject the Plan. Consequently, Class 1 is deemed to have
accepted the Plan and Classes 6, 7 and 8 are deemed to have rejected the Plan
and, therefore, none of the holders of Claims or Interests in such Classes are
entitled to vote to accept or reject the Plan.
C. Solicitation Order. On or about May _____, 2005, the Bankruptcy Court
entered an order that, among other things, determines the dates and procedures
applicable to the process of soliciting votes on the Plan and establishes
certain procedures with respect to the tabulation of such votes (the
"Solicitation Order"). Parties in interest may obtain a copy of the Solicitation
Order by making written request upon the Debtors' counsel or may access a copy
on Debtors' website at
www.dev.thompsonhine.com/practicegroups/bankruptcy/Amcast/.
D. Waivers of Defects, Irregularities, Etc. Unless otherwise directed by
the Bankruptcy Court, all questions as to the validity, form, eligibility
(including time of receipt), acceptance and revocation or withdrawal of ballots
will be determined by the Voting Agent and the Debtors in their sole discretion,
which determination will be final and binding. As indicated below under
"Withdrawal of ballots; Revocation," effective withdrawals of ballots must be
delivered to the Voting Agent prior to the Voting Deadline. The Debtors reserve
the absolute right to contest the validity of any such withdrawal. The Debtors
also reserve the right to reject any and all ballots not in proper form, the
acceptance of which would, in the opinion of the Debtors or their counsel, be
unlawful. The Debtors further reserve the right to waive any defects or
irregularities or conditions of delivery as to any particular ballot. The
interpretation (including the ballot and the respective instructions thereto) by
the Debtors, unless otherwise directed by the Bankruptcy Court, will be final
and binding on all parties. Unless waived, any defects or irregularities in
connection with deliveries of ballots must be cured within such time as the
Debtors (or the Bankruptcy Court) determine. Neither the Debtors nor any other
Person will be under any duty to provide notification of defects or
irregularities with respect to deliveries of ballots nor will any of them incur
any liabilities for failure to provide such notification. Unless otherwise
directed by the Bankruptcy Court, delivery of such ballots will not be deemed to
have been made until such irregularities have been cured or waived. Ballots
previously furnished (and as to which any irregularities have not theretofore
been cured or waived) will be invalidated.
97
E. Withdrawal of Ballots; Revocation. Any party who has delivered a valid
ballot for the acceptance or rejection of the Plan may withdraw such acceptance
or rejection by delivering a written notice of withdrawal to the Voting Agent at
any time prior to the Voting Deadline. A notice of withdrawal, to be valid, must
(a) contain the description of the Claim(s) to which it relates and the
aggregate principal amount represented by such Claim(s), (b) be signed by the
withdrawing party in the same manner as the ballot being withdrawn, (c) contain
a certification that the withdrawing party owns the Claim(s) and possesses the
right to withdraw the vote sought to be withdrawn and (d) be received by the
Voting Agent in a timely manner in accordance with Article III.D of the
Disclosure Statement. The Debtors intend to consult with the Voting Agent to
determine whether any withdrawals of ballots were received and whether the
requisite acceptances of the Plan have been received. As stated above, the
Debtors expressly reserve the absolute right to contest the validity of any such
withdrawals of ballots.
Unless otherwise directed by the Bankruptcy Court, a purported notice of
withdrawal of ballots which is not received in a timely manner by the Voting
Agent will not be effective to withdraw a previously cast ballot.
Any party who has previously submitted to the Voting Agent prior to the
Voting Deadline a properly completed ballot may revoke such ballot and change
his or its vote by submitting to the Voting Agent prior to the Voting Deadline a
subsequent properly completed ballot for acceptance or rejection of the Plan. In
the case where more than one timely, properly completed ballot is received, only
the ballot which bears the latest date will be counted for purposes of
determining whether the requisite acceptances have been received.
F. Voting Rights of Disputed Claimants. Holders of Disputed Claims whose
Claims are (a) asserted as wholly unliquidated or wholly contingent in Proofs of
Claim filed prior to the Voting Record Date or (b) whose Claims are asserted in
Proofs of Claim as to which an objection to the entirety of the Claim is pending
as of the Voting Record Date (collectively, the "Disputed Claimants") are not
permitted to vote on the Plan except as provided in the Solicitation Order.
Pursuant to the procedures outlined in the Solicitation Order, Disputed
Claimants may obtain a ballot for voting on the Plan only by filing a motion
under Bankruptcy Rule 3018(a) seeking to have their Claims temporarily allowed
for voting purposes (a "Rule 3018 Motion"). Any such Rule 3018 Motion must be
filed with the Bankruptcy Court and served upon the Debtors' counsel and the
Voting Agent by no later than ___________, 2005 at 4:00 p.m. Eastern Time (the
"Rule 3018 Motion Deadline"). Any party timely filing and serving a Rule 3018
Motion will be provided a ballot and be permitted to cast a provisional vote to
accept or reject the Plan. If and to the extent that the Debtors and such party
are unable to resolve the issues raised by the Rule 3018 Motion prior to the
_____________2005 Voting Deadline established by the Bankruptcy Court, then at
the Confirmation Hearing the Bankruptcy Court will determine whether the
provisional ballot should be counted as a vote on the Plan. Nothing herein
affects the Debtors' right to object to any Proof of Claim after the Voting
Record Date. With respect to any such objection, the Debtors may request that
any vote cast by the holder of the Claim subject to the objection be disallowed
and not counted in determining whether the requirements of Section 1126(c) of
the Bankruptcy Code have been met.
G. Further Information; Additional Copies. If you have any questions or
require further information about the voting procedures for voting your Claim or
about the packet of
98
material you received, or if you wish to obtain an additional copy of the Plan,
this Disclosure Statement, or any exhibits or appendices to such documents (at
your own expense, unless otherwise specifically required by Bankruptcy Rule
3017(d) or the Solicitation Order), please go to the Debtors' website at
www.dev.thompsonhine.com/practicegroups/bankruptcy/Amcast/ or contact the Voting
Agent at:
JPMorgan Trust Company, National Association
c/o Administar Services Group
8475 Western Way, Suite 110
Jacksonville, FL 32256
Tel: (904) 807-3023
RECOMMENDATION AND CONCLUSION
For all of the reasons set forth in this Disclosure Statement, the Debtors
believe that confirmation and consummation of the Plan is preferable to all
other alternatives. Consequently, the Debtors urge all holders of Claims in
Classes 2, 3, 4 and 5 to vote to ACCEPT the Plan, and to complete and return
their ballots so that they will be RECEIVED on or before 4:00 p.m. Eastern Time
on the Voting Deadline.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
99
Dated: April 28, 2005 Amcast Industrial Corporation, on its own
Dayton, Ohio behalf and on behalf of each subsidiary
debtor
By: /s/ Jeffrey A. McWilliams
-------------------------------
Jeffrey A. McWilliams
V.P. of Administration and Secretaries
of the Debtors-in-Possession
COUNSEL:
Alan R. Lepene, Esq.
Jeremy M. Campana, Esq.
THOMPSON HINE LLP
3900 Key Center
127 Public Square
Cleveland, OH 44114-1291
Telephone: 216.566.5500
Facsimile: 216.566.5800
alan.lepene@thompsonhine.com
jeremy.campana@thompsonhine.com
-and-
Lawrence T. Burick, Esq.
Jennifer L. Maffett, Esq.
THOMPSON HINE LLP
2000 Courthouse Plaza N.E.
10 West Second Street
Dayton, Ohio 45402
Telephone: 937.443.6600
Facsimile: 837.443.6635
larry.burick@thompsonhine.com
jennifer.maffett@thompsonhine.com
Attorneys for Debtors and Debtors in
Possession
100