Bondholders Withdraw All Objections to Southland Plan

Southland Corp., parent of 7-Eleven convenience stores, said Wednesday that bondholders withdrew all objections to the company’s latest overhaul plan, clearing the way for a vote on the proposal.

For the second time in four months, Southland will ask its shareholders to approve a reorganization designed to bring the company out of bankruptcy by permitting Japanese investors to buy a controlling interest for $430 million.

U.S. Bankruptcy Judge Harold Abramson approved the presentation of the changes in the plan and ordered them sent to the company’s creditors. Creditors must return a vote by the end of business Feb. 16. Abramson scheduled a confirmation hearing Feb. 22.

Southland filed to reorganize under Chapter 11 of the U.S. Bankruptcy Code in October, saying it was overburdened by debt from its 1987 leveraged buyout.

The company filed a “prepackaged” reorganization plan, one already approved by most creditors, in hopes of getting through the bankruptcy process sooner.

But those hopes were dashed when Abramson opened confirmation hearings last month. Dissident bondholders said the first creditors’ vote was conducted too quickly and missed individual investors whose bonds were held by securities houses that voted in bulk.

The judge ordered Southland to prepare a new summary of the plan so that creditors could recast their vote. With changes agreed upon Wednesday, the dissidents withdrew their letters.

The fundamentals of the restructuring were unchanged by the new agreement. Creditors would get a 25% stake in the new company. Existing stockholders, including the founding Thompson family, would retain a 5% stake. And Southland’s Japanese affiliates, Ito-Yokado Group Ltd. and Seven-Eleven Japan Co., would get 70%.