UPDATE 2-Mega Brands seeks U.S. bankruptcy court protection
* Files Chapter 15 in Delaware
* Lists assets and debt in $100 mln to $500 mln range
* Shares fall 6.3 percent to 60 Canadian cents (In U.S. dollars; adds background, company comments, stock movement)
TORONTO, Feb 19 (Reuters) - Canadian toymaker Mega Brands (MB.TO), which has been trying to recover from a big product recall several years ago, filed a Chapter 15 proceeding in a U.S. bankruptcy court in Delaware, clearing the way for a key recapitalization vote next month.
The Montreal-based company, whose shares fell more than 6 percent, said on Friday that it had started proceedings in Canada on Feb. 12 to implement a restructuring that would cut its debt by about $290 million and annual interest expenses by about $30 million.
In its U.S. petition late on Thursday, Mega Brands listed both assets and debt in the range of $100 million to $500 million.
Non-U.S. companies use Chapter 15 to block creditors that want to file lawsuits or tie up assets in the United States.
The restructuring deal, announced in January, includes raising C$100 million ($95.1 million) through a stock sale and $121 million in a private placement.
Mega Chief Financial Officer Peter Ferrante said the filing allowed the company to proceed with its vote on the recapitalization on March 16.
"The courts have allowed us to go ahead with the lenders vote and the shareholder vote," Ferrante said. "This will allow us to either go forward with our recapitalization or to not go forward with the recapitalization."
Two-thirds majorities are needed for both the lender and shareholder votes, he said. Already 71.5 percent of the lenders have agreed to the plan.
Mega shares, which have fallen almost 50 percent since the announcement of the restructuring plan in January, were down 6.3 percent at 60 Canadian cents in early Toronto Stock Exchange trading.
The company is still recovering from a huge recall of its Magnetix toys, which began in 2006 and was expanded in 2007. One child died and 27 were seriously injured after swallowing small, powerful magnets that came loose from the toys, which were acquired as part of Mega's takeover of U.S.-based Rose Art.
In March 2008, Mega Brands announced two separate recalls after reports of magnets coming loose from several toys manufactured in China. The company downsized operations at the former Rose Art plant in China and outsourced production.
Last year, lenders agreed to waive some conditions on Mega's credit facilities maturing in 2012. They also relaxed some covenants pertaining to minimum levels of earnings before interest, taxes, depreciation, and amortization.
The case is In re: Mega Brands Inc, U.S. Bankruptcy Court, District of Delaware (Delaware), No: 10-10485.
($1=$1.05 Canadian) (Reporting by Scott Anderson in Toronto and Santosh Nadgir in Bangalore; Editing by Lisa Von Ahn)
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