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IWO Holdings will not make interest payment, may file for bankruptcy
By Carlise Newman
Chicago, June 2 - IWO Holdings Inc. said it will not make a scheduled interest payment on its $240 million credit facility on June 4, and may have to seek bankruptcy protection. IWO was already not in compliance with its restrictive covenants under the IWO senior bank credit facility at March 31.
The company said it is in discussions with the IWO banking group regarding the restructuring of the IWO debt, and has not been able to develop a business plan that provides sufficient liquidity in 2003. As a result, IWO warned it may consider voluntarily seeking bankruptcy protection as a means to further preserve liquidity.
IWO's lenders have been advised that the interest payment will not be made and some have voiced agreement to the decision to not make the payment while restructuring discussions are taking place, the company said.
Each lender under the credit group has reserved the right to exercise any and all remedies under the credit agreement resulting from the defaults and, as a result, the holders of IWO's senior bank credit facility can restrict any remaining future borrowing capacity and accelerate repayment of the senior bank credit facility.
Default under IWO's senior bank credit facility does not result in a default on its senior notes. However, an acceleration of the facility does trigger a default on the notes.
If either the holders of the credit facility or the senior notes accelerate their obligations, the Albany, N.Y.-based wireless communications company said it does not have sufficient cash to repay its indebtedness - which could result in its bankruptcy.
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