|
|
|
DEBTORS' JOINT DISCLOSURE STATEMENT
PURSUANT TO SECTION 1125 OF THE BANKRUPTCY CODE
WEIL, GOTSHAL & MANGES LLP
Attorneys for the Debtors
700 Louisiana, Suite 1600
Houston, Texas 77002
(713) 546-5000
and
100 Crescent Court, Suite 1300
Dallas, Texas 75201
(214) 746-7700
Dated: Houston, Texas
September 21, 2001
{PAGE} 2
{TABLE}
{S} {C}
INTRODUCTION...........................................................................1
A. Holders of Claims and Equity Interests Entitled to Vote..................2
B. Voting Procedures........................................................3
C. Confirmation Hearing.....................................................3
II. OVERVIEW OF THE PLAN..........................................................5
III. GENERAL INFORMATION...........................................................7
A. Overview of Chapter 11...................................................7
B. Description and History of Business......................................7
1. The Debtors........................................................7
2. History............................................................9
3. Business...........................................................9
4. Ownership of the Debtors..........................................10
5. Production, Distribution, and Storage Facilities..................10
6. Significant Indebtedness..........................................12
C. Events Leading to the Commencement of the Chapter 11 Cases..............13
IV. EVENTS DURING THE CHAPTER 11 CASES...........................................15
A. Stabilization of Business...............................................15
1. Continuation of Business; Stay of Litigation......................15
2. First Day Orders..................................................16
3. DIP Facility......................................................16
4. Retention of Professionals........................................16
5. Compliance with Bankruptcy Code, Bankruptcy Rules,
Local Court Rules, and U.S. Trustee Deadlines.....................17
B. Appointment of the Creditors' Committee.................................17
V. THE PLAN OF REORGANIZATION...................................................18
A. Classification and Treatment of Claims and Equity Interests.............18
1. Compensation and Reimbursement Claims.............................18
2. Administrative Expense Claims.....................................19
3. Priority Tax Claims...............................................20
4. Class 1 - Other Priority Claims...................................20
5. Class 2 - Congress Secured Claims.................................20
6. Class 3 - PCA U.S. Secured Term and Note Claims...................21
7. Class 4 - Canadian Secured Term and Note Claims...................21
{/TABLE}
{PAGE} 3
{TABLE}
{S} {C}
8. Class 5 - Secured Tax Claims......................................22
9. Class 6 - Other Secured Claims....................................22
10. Class 7 - Convenience Claims......................................23
11. Class 8 - General Unsecured Claims................................23
12. Class 9 - Canadian Deficiency Claims and U.S.
Deficiency Claims.............................................24
13. Class 10 - Subordinated Claims....................................25
14. Class 11 - PCI Equity Interests...................................25
B. Securities to be Issued Under the Plan..................................25
1. New Notes.........................................................25
2. New Common Stock..................................................25
C. Method of Distributions Under the Plan..................................26
D. Timing of Distributions Under the Plan..................................27
1. Distributions on the Effective Date...............................27
2. Distributions to Holders of General Unsecured Claims..............27
E. Consolidation of the Debtors............................................28
1. Restructuring Transactions........................................28
2. Order of Transactions.............................................31
3. Approval and Acknowledgment.......................................31
4. Substantive Consolidation.........................................32
5. Issuance and Transfers of Common Stock of the Subsidiaries........33
6. Merger of Corporate Entities......................................33
F. Treatment of Executory Contracts and Unexpired Leases...................33
G. Provisions for Treatment of Disputed Claims and Equity Interests........35
H. Distributions Relating to Allowed Insured Claims........................36
I. Implementation and Effect of Confirmation...............................36
a. Means for Implementation of the Plan..........................36
b. Term of Bankruptcy Injunction or Stays........................41
c. Revesting of Assets...........................................41
d. Causes of Action..............................................41
e. Discharge of Debtors..........................................41
f. Injunction....................................................41
J. Conditions Precedent to Effectiveness of the Plan.......................42
1. Conditions Precedent..............................................42
{/TABLE}
2
{PAGE} 4
{TABLE}
{S} {C}
2. Effect of Failure of Conditions...................................43
3. Waiver of Conditions to Confirmation and Effective Date...........43
4. Effects of Plan Confirmation......................................43
a. Limitation of Liability.......................................43
b. Releases......................................................44
c. Mutual Releases...............................................44
K. Implementation and Effect of Confirmation of the Plan...................45
L. Discharge and Injunction................................................45
M. Summary of Other Provisions of the Plan.................................46
1. Retiree Benefits..................................................46
2. Amended Bylaws and Amended Certificates of Incorporation..........46
3. Amendments or Modifications of the Plan...........................47
4. Indemnification...................................................48
5. Cancellation and Surrender of Existing Securities and
Agreements........................................................48
6. Revocation of the Plan............................................49
7. Preservation of Causes of Action..................................49
8. Termination of Committees.........................................50
9. Effectuating Documents, Further Transactions and Corporate
Action............................................................50
10. Plan Supplement...................................................50
11. Voting for Purposes of the Canadian Plan..........................51
VI. CONFIRMATION AND CONSUMMATION PROCEDURE......................................51
A. Solicitation of Votes...................................................51
B. The Confirmation Hearing................................................52
C. Confirmation............................................................53
1. Acceptance........................................................53
2. Unfair Discrimination and Fair and Equitable Tests................53
3. Feasibility.......................................................54
4. Best Interests Test...............................................55
D. Consummation............................................................56
E. Exit Financing..........................................................57
VII. MANAGEMENT OF THE REORGANIZED DEBTORS........................................57
A. Board of Directors and Management.......................................57
{/TABLE}
3
{PAGE} 5
{TABLE}
{S} {C}
1. Composition of Boards of Directors................................57
a. Reorganized Pioneer...........................................57
b. Reorganized Subsidiaries......................................57
2. Identity of Officers..............................................57
B. Compensation of Executive Officers......................................59
C. Management Equity Incentive Plan........................................60
D. Continuation of Existing Severance Plans and D&O Insurance..............60
VIII. SECURITIES LAWS MATTERS......................................................60
A. Initial Offer and Distribution of the New Securities....................60
B. Subsequent Transfers of the New Securities..............................61
C. Shelf Registration Statement............................................63
D. Registration Rights Agreements..........................................63
E. Applicability of Canadian Securities Laws...............................64
IX. VALUATION....................................................................64
A. Reorganization Value....................................................64
X. CERTAIN RISK FACTORS TO BE CONSIDERED........................................66
A. Overall Risks to Recovery by Holders of Claims..........................66
1. Ability to Refinance Certain Indebtedness.........................66
2. Significant Holders...............................................66
3. Lack of Established Market for the New Common Stock...............67
4. Lack of Trading Market for the New Tranche B Notes.......... .....67
5. Dividend Policies.................................................67
6. Preferred Stock...................................................67
7. Projected Financial Information...................................68
8. Business Factors and Competitive Conditions.......................68
9. U.S. Environmental Laws...........................................69
10. Canadian Environmental Laws.......................................71
11. Indemnities............................................... .......72
12. Hart-Scott-Rodino Act Requirements................................74
13. Market Volatility.................................................75
XI. CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN.....................76
A. Introduction............................................................76
B. Consequences to Holders of Claims.......................................77
{/TABLE}
4
{PAGE} 6
{TABLE}
{S} {C}
1. Realization and Recognition of Gain or Loss in General............77
2. Holders of Allowed Administrative Expense Claims
(Unclassified), and Allowed Other Priority Claims (Class 1).......78
3. Holders of Congress Secured Claims (Class 2)......................78
4. Holders of Allowed PCA U.S. Secured Term and Note Claims
(Class 3) and Allowed Canadian Secured Term and
Note Claims (Class 4).............................................78
a. Gain or Loss..................................................78
b. Interest Income...............................................80
5. Holders of Other Secured Claims (Class 6).........................81
6. Holders of Allowed Convenience Claims (Class 7)...................82
7. Holders of Allowed General Unsecured Claims (Class 8)
and Allowed Canadian Deficiency Claims and U.S.
Deficiency Claims (Class 9).......................................82
8. Holders of Subordinated Claims (Class 10)
and PCI Equity Interests (Class 11)...............................82
9. Allocation of Consideration to Interest...........................83
10. U.S. Withholding..................................................83
C. Consequences to the Debtors or the Reorganized Debtors..................83
1. Discharge-of-Indebtedness Income Generally........................83
2. Attribute Reduction...............................................84
3. Utilization of Net Operating Loss Carryovers......................85
4. Consolidated Return Items.........................................86
5. Restructuring Transactions........................................87
6. Alternative Minimum Tax...........................................87
7. Special Considerations Applicable to PCICC........................87
XII. CERTAIN CANADIAN FEDERAL INCOME TAX CONSEQUENCES.............................88
A. Introduction............................................................88
B. Consequences to Nonresident Holders of Claims...........................88
C. Consequences to the Debtors and the Reorganized Debtors.................89
XIII. ALTERNATIVES TO CONFIRMATION AND CONSUMMATION OF THE PLAN....................89
A. Liquidation Under Chapter 7.............................................89
B. Alternative Plan of Reorganization......................................90
XIV. CONCLUSION AND RECOMMENDATION................................................90
{/TABLE}
5
{PAGE} 7
INTRODUCTION
Pioneer Companies, Inc. ("PCI") and its affiliates, Pioneer Corporation
of America ("PCA"), PCI Chemicals Canada Inc./PCI Chimie Canada Inc. ("PCICC"),
Pioneer Americas, Inc. ("PAI"), Pioneer (East) Inc. ("Pioneer East"), Pioneer
Licensing, Inc. ("Pioneer Licensing"), Pioneer Water Technologies, Inc. ("PWT"),
Imperial West Chemical Co. ("Imperial"), Kemwater North America Company ("KNA"),
and KWT, Inc. ("KWT") (PCA, PCICC, PAI, Pioneer East, Pioneer Licensing, PWT,
Imperial, KNA, and KWT are referred to collectively as the "Subsidiaries"), in
these jointly administered Chapter 11 Cases (PCI and the Subsidiaries are
collectively referred to as "Pioneer" or the "Debtors") submit this Disclosure
Statement pursuant to section 1125 of title 11 of the United States Code (the
"Bankruptcy Code") to holders of Claims against and Equity Interests in the
Debtors in connection with (i) the solicitation of acceptances of the Debtors'
Amended Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code
dated September 21, 2001, as the same may be amended (the "Plan") filed by the
Debtors with the United States Bankruptcy Court for the Southern District of
Texas, Houston Division (the "Bankruptcy Court") and (ii) the hearing to
consider confirmation of the Plan (the "Confirmation Hearing") scheduled for
November 7, 2001 at 2:00 p.m. (Central Time). Unless otherwise defined herein,
all capitalized terms contained herein have the meanings ascribed to them in the
Plan.
Attached as exhibits to this Disclosure Statement are copies of the
following:
o The Plan (Exhibit A);
o Order of the Bankruptcy Court dated September 21, 2001 (the
"Disclosure Statement Order"), among other things, approving the
Disclosure Statement and establishing certain procedures with
respect to the solicitation and tabulation of votes to accept or
reject the Plan (Exhibit B);
o Pioneer Companies, Inc., et al. 2000 Form 10-K (Exhibit C);
o Pioneer Companies, Inc., et al. Projected Financial Information
(Exhibit D); and
o Pioneer Companies, Inc., et al. Liquidation Analysis (Exhibit E).
In addition, a Ballot for the acceptance or rejection of the Plan is
enclosed with the Disclosure Statement submitted to the holders of Claims that
the Debtors believe may be entitled to vote to accept or reject the Plan.
On September 21, 2001, after notice and a hearing, the Bankruptcy Court
entered the Disclosure Statement Order approving this Disclosure Statement as
containing adequate information of a kind and in sufficient detail to enable
hypothetical, reasonable investors typical of the Debtors' creditors and equity
interest holders to make an informed judgment whether to accept or reject 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.
{PAGE} 8
The Disclosure Statement Order, a copy of which is annexed hereto as
Exhibit B, sets forth in detail the deadlines, procedures and instructions for
voting to accept or reject the Plan and for filing objections to confirmation of
the Plan, the record date for voting purposes, and the applicable standards for
tabulating Ballots. In addition, detailed voting instructions accompany each
Ballot. Each holder of a Claim entitled to vote on the Plan should read the
Disclosure Statement, the Plan, the Disclosure Statement Order and the
instructions accompanying the Ballots in their entirety before voting on the
Plan. These documents contain, among other things, important information
concerning the classification of Claims and Equity Interests for voting purposes
and the tabulation of votes. No solicitation of votes to accept the Plan may be
made except pursuant to section 1125 of the Bankruptcy Code.
A. Holders of Claims and Equity Interests Entitled to Vote.
Pursuant to the provisions of the Bankruptcy Code, only holders of
allowed claims or equity interests in classes of claims or equity interests that
are impaired are entitled to vote to accept or reject a proposed chapter 11
plan. Classes of claims or equity interests in which the holders of claims or
equity interests are unimpaired under a chapter 11 plan are deemed to have
accepted the plan and are not entitled to vote to accept or reject the plan.
Classes 3, 4, 5, 7, 8 and 9 of the Plan are impaired and, to the extent
Claims in such Classes are Allowed Claims, the holders of such Claims will
receive distributions under the Plan. Holders of Claims in those Classes are
entitled to vote to accept or reject the Plan. Classes 1, 2 and 6 of the Plan
are unimpaired and are conclusively presumed to have accepted the Plan. Classes
10 and 11 and of the Plan are impaired and will receive no distributions under
the Plan. Holders of Subordinated Claims and Equity Interests in Classes 10 and
11 are conclusively presumed to have rejected the Plan. Therefore, the Debtors
are soliciting acceptances only from holders of Allowed Claims in Classes 3, 4,
5, 7, 8, and 9.
The Bankruptcy Code defines "acceptance" of a plan by a class of claims
as acceptance by creditors in that class that hold at least two-thirds in dollar
amount and more than one-half in number of the claims that cast ballots for
acceptance or rejection of the Plan. For a more detailed description of the
requirements for confirmation of the Plan, see Section VI., "Confirmation and
Consummation Procedure."
If a Class of Claims rejects the Plan, the Debtors reserve the right to
amend the Plan or request confirmation of the Plan pursuant to section 1129(b)
of the Bankruptcy Code or both. Section 1129(b) permits the confirmation of a
plan of reorganization notwithstanding the nonacceptance of a plan by one or
more impaired classes of claims or equity interests. Under that section, a plan
may be confirmed by a bankruptcy court if it does not "discriminate unfairly"
and is "fair and equitable" with respect to each nonaccepting class. For a more
detailed description of the requirements for confirmation of a nonconsensual
plan, see Section VI.C.2., "Confirmation and Consummation Procedure --
Confirmation -- Unfair Discrimination and Fair and Equitable Tests."
If one or more of the Classes of Claims entitled to vote on the Plan
votes to reject the Plan, the Debtors intend to request confirmation of the Plan
|
End of Preview |
Home Intelligence Services Subscriptions News About Us