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Peregrine Closer to Recovery

May 29, 2003|From Bloomberg News

San Diego software maker Peregrine Systems Inc. moved a step closer toward exiting Bankruptcy Court protection.

U.S. Bankruptcy Judge Judith Fitzgerald in Pittsburgh said she would give the company the go-ahead today to seek approval from creditors for a recovery plan. She scheduled a July 8 hearing to consider final approval of the plan, which would pay some creditors over four years.

Peregrine filed for Chapter 11 bankruptcy protection in September to help resolve $607 million in debt and accounting problems that led to investigations by the Securities and Exchange Commission and the Justice Department.

In February, Peregrine reduced its revenue for April 1, 1999, through Dec. 31, 2001, by $509 million.

Under the latest plan, holders of $270 million in Peregrine's 5.5% notes would be paid 30% of their claims in cash, 20% in new notes and the rest in stock, according to court papers.

Unsecured creditors could choose either 60% of their claims in cash when the plan is approved plus 10% over four years, or full repayment over four years. Shareholders would get new stock in the reorganized company.

Fitzgerald will determine the value of the new shares next month. She is reviewing estimates of $110 million to $360 million for the reorganized company, according to court papers.

Typically, a majority of voting creditors representing two- thirds of the company's total debt must approve a Chapter 11 plan before it goes to a judge for final approval.

Peregrine shares, which traded above $79 in March 2000, fell 4 cents to 35 cents in over- the-counter trading.

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