AirGate PCS delays 10-K filing, warns on possible default, sees iPCS filing for bankruptcy

New York, Dec. 31 - AirGate PCS, Inc. said it pushed back the filing of its form 10-K annual report to the Securities and Exchange Commission and warned that the delay could put it in default on its senior secured credit facility and discount notes.

AirGate PCS said the extra time is needed to allow it to complete a review of balances owed by Sprint and its subscriber accounts receivable balances, and to address other matters that may arise, including any impact on earlier periods.

In addition, the delay will allow the company's independent auditors KPMG to complete their audit.

Among the factors to be examined by KPMG is the impact of the expected bankruptcy filing by iPCS on AirGate. The auditors will also evaluate AirGate's business plan.

AirGate noted that as previously announced iPCS has hired Houlihan Lokey Howard & Zukin Capital to assist in restructuring its bank facility, notes and relationship with Sprint. The restructuring is likely to involve a bankruptcy filing, AirGate said.

AirGate added that its senior secured credit facility requires it to deliver audited financial statements accompanied by an unqualified opinion by Dec. 30, 2002. If it does not do so, the lenders could deliver a notice of default, after which AirGate would have 30 days to cure the default. The lenders would also have no obligation to honor draw requests although AirGate said it does not anticipating making extra borrowings during this period.

AirGate's discount notes also require that the company deliver an audit opinion by Dec. 30, 2002. A default could be declared by the trustee or holders of at least 25% of the notes. AirGate would have 60 days to cure the default.

The Atlanta wireless telephone company said it has filed a Notification of Late Filing with the SEC giving it until Jan. 14, 2003 to file the 10-K.

iPCS will also be unable to deliver the audited financial statements and audit opinion required by its credit facility and note indenture - and also anticipates being unable to do so within the cure period.

iPCS said it is working on a forbearance agreement with its lenders and noteholders.

Finally, iPCS said in a filing with the Securities and Exchange Commission that it has asked the SEC to allow it to stop filing reports with the commission based on the "limited number" of holders of its 14% senior discount notes due 2010.

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