Pact May Keep Greyhound From Bankruptcy : Restructuring: For 45% of the bus line, bondholders will cancel $98 million in debt.

An agreement with creditors has allowed Greyhound Lines Inc. to dodge bankruptcy court--at least for now.

Greyhound and a subcommittee of its bondholders agreed to a financial reorganization that would give the debt holders about 45% of the company in exchange for forgiving $98.9 million in debt.

Bondholders also would be allowed to nominate two of the firm’s nine directors.

Both sides said they were pleased with the deal, reached late Thursday after several weeks of tough negotiations that included an attempt to force the company into bankruptcy. Greyhound missed a $4.2-million interest payment Sept. 30.

“I can’t wait to have my next bus ride,” bondholder attorney Robin Phelan said.

The involuntary bankruptcy petition, which bondholders credited with speeding the negotiations, will be withdrawn when the reorganization is finished.

The creditors agreed to give Greyhound until about Jan. 10 to complete the restructuring, which the company wants done by the end of the year to avoid $15 million in taxes.

“Their intention is to resolve this without the need for the Bankruptcy Court, and we don’t have an objection. But if they have to use the bankruptcy process, we have no objection to that either,” said another bondholder attorney, Michael Solow.

The reorganization plan still needs the approval of the bondholders and shareholders, which the company said it expects to get next month.

Wilbur Ross, senior managing director of Greyhound financial adviser Rothschild Inc., noted that Greyhound’s stock and bond prices rose Friday after the deal was announced. “I think that people have really already voted,” Ross said.

Greyhound stock opened 25 cents higher on the American Stock Exchange Friday morning, but by the close of trading it had fallen back to $2.19 a share.

The value of the bondholders’ investment rose $10.75 per $100 in face amount on Friday to $40.50.

Under terms of the agreement, existing shareholders will keep their original 14.7 million shares of common stock, or 26% of the restructured company, and $35 million in new equity will be raised by selling 16.3 million shares, initially offered to current shareholders, for $2.15 a share.

Greyhound originally offered a 28% stake in the company to bondholders, who in turn demanded 85%. The negotiations narrowed that to between 40% and 50% this week.