Source: Daily Deal
 
A Manhattan judge approved the $40 million cash sale Thursday, Sept. 18, of the Itronix Corp. unit of bankrupt Acterna Corp. to private equity firm Golden Gate Capital.
 
By giving the deal his blessing, Judge Burton Lifland of the U.S. Bankruptcy Court for the Southern District of New York cleared the way for Acterna to complete it and emerge from Chapter 11 by Oct. 1, said the debtor's lawyer, Timothy Graulich of Weil, Gotshal & Manges LLP.
 
The handful of objections to the deal were all resolved before or at the hearing, he said.
 
San Francisco-based Golden Gate filed a stalking-horse bid calling for a $1.2 million breakup if it lost out in an auction for Itronix, but no other formal bidders stepped forward.
 
The sale of Itronix, which makes computers rugged enough to withstand dirt and other substances that often cause such machines to break down, leaves Acterna with its core products testing business.
 
The company will be back in court on Sept. 25 for a hearing on the confirmation of its reorganization plan.
 
Germantown, Md.-based Acterna made a prenegotiated Chapter 11 filing on May 6 after defaulting on its credit facility. It filed its disclosure statement Aug. 4.
 
Acterna won court approval earlier this month on a first extension of its exclusive right to file a sole reorganization plan until Dec. 31 and to solicit creditor approval until Feb. 28, 2004, Graulich said.
 
The company's prenegotiated plan calls for banks to recover 41 cents on the dollar on their $680 million in claims as Acterna seeks to slash $960 million in long-term debt by about 80%. The bank group, fronted by J.P. Morgan Chase & Co., would receive all the new stock in a reorganized Acterna via a debt-for-equity swap.
 
Holders of about $169 million in unsecured bonds would get a nominal recovery through warrants, while trade creditors are slated to receive a higher recovery, with an estimated 10 cents on the dollar, through its warrants, he said. (If all the warrants are exercised, 5% of the reorganized Acterna's equity would be in the hands of the bondholders and trade creditors. The bank group's equity would be diluted by that amount.)
 
J.P. Morgan also joined GE Capital Corp. in providing a $30 million debtor-in-possession loan priced at either prime plus 300 basis points or LIBOR plus 400 basis points.
 
Miller Buckfire Lewis Ying & Co. LLC in New York is Acterna's restructuring adviser. AP Services LLC is the company's crisis manager, and U.S. Bancorp Piper Jaffray Inc. is its investment banker.
 
Matthew Kleiman of Kirkland & Ellis LLP in Chicago is Golden Gate's counsel.
 
Graulich and Paul Basta are New York debtor counsel at Weil Gotshal, while Andrew Eckstein and Catherine Horta in New York and Michael Schaedle in Philadelphia are creditors' counsel at Blank Rome LLP.
 
Ernst & Young Corporate Finance LLC is financial counsel to the creditors.