Memorex Telex International NV is progressing with its plan to put together a prepackaged plan of reorganisation to put to the US Federal Bankruptcy Court in Delaware, and expects to file for the protection of the court before the end of the year. The reorganisation plan had to be agreed by the majority of creditors before the company filed with the court because Memorex is not a US company: it is registered in the Netherlands, but an aim of a prepackaged bankruptcy filing is to make approval by the court and subsequent discharge a formality. Memorex does not expect to spend more than 30 to 45 days operating under Chapter 11 court protection. The numbers have improved a little since Memorex announced its plans in July (CI No 1,718) but the reorganisation will still leave holders of its junk bonds with 95% of the equity of the company. The improvement is that total debt will be reduced to $643m all the preferred stock will be gone and annual interest payments to $90m where the figures had been $700m and $100m. Voting among the various classes of stock and bond holders on the plan began on Wednesday, and the company says that it has received no opposition to the plan so far. It has arranged an $85m financing facility to keep it going while in Chapter 11 but does not expect to draw on it. Goodwill has been written down to $505m from $801m and the company says that once it has been discharged, it will be operating profitably after debt service.
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