USA Springs clears final hurdle in bankruptcy court
USA Springs has cleared its last major hurdle in bankruptcy court, thanks to a $16.6 million advance from Malom Group, its newfound Swiss backer, which enables it to pay off creditors who might object to a $60 million reorganization plan.That would enable the company to renew work on its controversial bottling plant in Nottingham after the effective date, which happened to fall on Halloween -- a scary prospect for diehard opponents of the plant who said they were worried about foreign interests getting control of local water supplies to sell overseas.Opponents also claimed that the company's optimism about the worth of its assets and permits is wildly inflated.But Joseph Micelli, the Malom Group's compliance officer who flew in from Las Vegas to attend the Aug. 25 bankruptcy hearing, said the plant was economically viable.He also maintained that withdrawing 300,000 gallons a day from a 10 million-gallon aquifer was "insignificant" and that using that water to create jobs was preferable than just allowing the water to be "dumped" in the Atlantic Ocean.Bankruptcy Court Judge J. Michael Deasy said he expected that he would approve (after some details were spelled out) the company's latest plan, including the bridge loan from Malom, which he joked was a "creditor evacuation plan."The bridge loan caused Roswell Commercial, the mortgage holder, to drop its objection to the plan. Roswell, which will receive slightly more than $10 million back on the deal, will give up another $2 million in claims.The unsecured creditors also will drop their claims against USA Springs and Roswell to guarantee 100 percent repayment on their claims. Insider creditors agreed to sign waivers, meaning they will be paid back at a later date.Loan of confidenceThe latest plan had already carved out $16.6 million for the non-insider creditors out of the $60 million in structured notes that Malom hoped to place, but before the latest amendment those creditors would have been first in line after the deal closed at the end of October.Now the creditors will get the cash upfront a month before the deal closes.USA Springs attorney Alan Braunstein repeatedly said that Malom was confident that there would be no impediments to the deal."Providing a bridge loan of this size is proof that they are confident," said Deasy, who added that getting this project back on track was "fairly remarkable," considering the economic uncertainty.Under the plan, the reorganized company (which would consolidate several trusts and New Hampshire corporations into USA Springs, incorporated in Delaware) will remain under the control of its president, Francesco Rotondo.Rotondo and his backers have spent $17 million since Rotondo formed the company in 1997, but it took nearly a decade to overcome the opposition of residents to state and federal permits.The company ran out of money and filed for Chapter 11 bankruptcy in 2008, with the 176,000-square-foot bottling facility 45 percent complete.The company has "preliminary" water contracts and letters of intent totaling $650 million in place with several European entities, including an organization in Malta and Martini & Rossi, the Italian multinational alcoholic beverage company."We are concerned that an international group will have access to our water with the protection of trade agreements," said Denise Hart, a spokesperson for Save Our Groundwater, one of the plant's opponents.Opponents also contended that several town and state permits have lapsed, and that the viability of the project is in question.Nottingham Town Manager Charlie Brown did say the town building permit has lapsed, but said there shouldn't be much problem getting a new one.If the town denied a building permit, it could kill the project, admitted Micelli, but in doing so the "there would be a loss of employment" and "anybody who is reasonable would understand the benefits" of the project.Micelli said that the project would start working on its permits after November and hope to have it completed in June 2012.