AMF Bowling Worldwide Inc. has scrapped its previous Chapter 11 plan and says it will merge with Strike Holdings LLC, known as Bowlmor, creating what it says will be the world's largest bowling operator, according to documents filed Friday.
Under the modified plan, junior lenders, who are owed $80 million, will convert their debt into equity and take control of the new entity. Credit Suisse and Cerberus Series Four Holdings LLC, a unit of private equity firm Cerberus Capital Management LP, are among the second-lien lenders backing the plan, according to AMF. Credit Suisse has signed on to provide a $230 million term loan facility and a $30 million revolving loan facility.
Additionally, other junior lenders have agreed to provide $50 million backstop financing, which will serve as working capital for the combined entity, Bowlmor AMF, and be used to pay cash distributions to AMF's other creditors.
"The prospect of combining Bowlmor's proven approach to operations and marketing with the AMF brand, its large number of locations and national market penetration represents an exciting opportunity for both companies," said Bowlmor CEO Tom Shannon, who will also head up the combined company. "The combination will not only result in a strong company but also the best bowling experience possible."
A hearing is set for Thursday to consider the new plan's disclosure statement. AMF says if the statement and plan are approved on schedule, it could exit bankruptcy and implement the merger by the end of June.
The new plan is supported by the official committee of unsecured creditors. Holders of first-lien debt, who are owed $215 million, will be repaid in full, while general unsecured creditors will likely receive $2.35 million, according to the company.
The combined entity is expected to have 7,500 employees, 276 bowling centers and annual revenues of about $450 million.
AMF had previously submitted a different plan, but was unable to get the support of key lenders. In December, JPMorgan Chase Bank NA and Cerberus told a Virginia bankruptcy judge that only a handful of the company's senior lenders were in favor of the Chapter 11 plan.
AMF filed for bankruptcy in November for the second time in 11 years, saying it had reached a deal with lenders and the landlord of most of its bowling centers on a restructuring process. AMF had planned to reorganize through a debt-for-equity conversion involving its first-lien lenders, depending on the possibility of better and higher offers.
But JPMorgan and Cerberus said the plan called for paying "an undisclosed but presumably substantial fee" to the first-lien lenders in return for their agreement to support the plan and provide about $150 million in exit financing.
In its bankruptcy petition, the Mechanicsville, Va.-based company listed assets of between $100 million and $500 million and liabilities of between $100 million and $500 million.
AMF is represented by Patrick J. Nash Jr., Jeffrey D. Pawlitz and Joshua A. Sussberg of Kirkland & Ellis LLP and by Dion W. Hayes, John H. Maddock III and Sarah B. Boehm of McGuireWoods LLP.
The case is In re: AMF Bowling Worldwide Inc., case number 3:12-bk-36495, in the U.S. Bankruptcy Court for the Eastern District of Virginia.
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