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Court approves Amended Disclosure Statment of Wellman
15
Nov '08
Wellman, Inc. announced that the Bankruptcy Court has approved its Amended Disclosure Statement and authorized the Company to begin soliciting votes on its plan of reorganization (the "Plan").

The Plan contemplates the following:
The debt of the first and second lien holders will be converted into equity of the reorganized company "Reorganized Wellman". The first lien holders will receive 70%, and the second lien holders will receive 30% of the common stock of Reorganized Wellman on the Plan's effective date, subject to dilution by the conversion of the newly issued convertible notes.

The Company will receive $90 million in cash in exchange for $120 million of convertible notes issued through a rights offering, which will be offered to the first and second lien holders. These notes can be converted into 60% of the common stock of Reorganized Wellman. The $90 million will be used to repay amounts borrowed under its Debtor in Possession Credit Agreement (the "DIP Facility") and pay certain deferred financing fees, administrative expenses, priority claims, cure payments and professional fees.

The first lien holders will receive the proceeds from the sale of the property, plant, and equipment associated with the Company's Palmetto facility. The second lien holders will receive approximately 80% of the proceeds, if any, of a litigation trust and the general unsecured creditors will receive the remainder.

The Plan provides that the Company will emerge from Bankruptcy provided the following three events occur:

The Company receives $90 million in cash proceeds from the rights offering; The first and second lien holder classes both vote to accept the plan of reorganization; and Payments required for certain administrative expenses, priority claims and cure claims do not exceed $28 million.

If any of the three events listed above does not occur, the Company will immediately begin the process of liquidating its remaining assets in cooperation with its DIP Lenders. It is likely that the operations of the Company's Pearl River facility located in Hancock County, MS would be shut down as part of this process.

The Company has obtained an amendment of its DIP Facility, which provides that the Company must achieve the following milestones in order to remain in compliance with the DIP Facility:

Receive an acceptable backstop commitment for the rights offering on or before November 25, 2008; Obtain an order confirming the Plan by December 16, 2008; and Emerge from bankruptcy prior to December 31, 2008. Mark Ruday, Wellman's Chief Executive Officer, stated "We have worked very hard in extremely difficult economic times to preserve value for all of our stakeholders.

Based on our current situation, we believe the Plan provides the best opportunity for our creditors to maximize their recoveries in these Chapter 11 cases. We look forward to working with our customers, vendors, employees and other stakeholders to emerge from bankruptcy as a stronger, more profitable and highly competitive company."

Wellman, Inc. manufactures and markets high-quality PermaClear brand PET (polyethylene terephthalate) packaging resin and polyester chips, engineering resins, fiber and filament and high quality fibers from recycled polyester.

Wellman

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