IWO Holdings begins solicitation for pre-packaged Chapter 11

By Jeff Pines

Washington, Dec. 1 - IWO Holdings Inc. said it has started a solicitation for a pre-packaged Chapter 11. The company said it already has lock-up agreements with holders of about 68% of the senior notes to vote for the pre-packaged Chapter 11.

Noteholders are expected to recover an estimated 47 cents on the dollar.

Under the proposed reorganization plan, IWO will repay all $215 million outstanding on its credit facility and give its noteholders all of the reorganized company's common stock. The company does not plan to list the stock. IWO has $160 million of 14% senior notes due Jan. 15, 2011 outstanding.

US Unwired Inc. is the sole owner of IWO Holdings, a PCS Sprint affiliate based in Lake Charles, La.

To repay the credit facility, a newly formed corporation will be merged into IWO Holdings and sell $225 million of new notes. The new company will issue $150 million of seven-year senior secured floating-rate notes and $75 million of 10-year senior discount notes. The floating rate will be based on Libor and a spread.

If the company cannot sell the senior discount notes then AIG Global Investment Corp., Ares Leveraged Investment Fund II LP, and Eaton Vance Management have agreed to buy up to $60 million of the notes. All three are senior noteholders.

If AIG, Ares and Eaton Vance buy more than a certain amount, they will get penny warrants to buy up to a 15% stake in the reorganized IWO on a fully diluted basis, according to the disclosure statement filed with the Securities and Exchange Commission Wednesday.

Ballots are due by Dec. 29.

If the plan gets enough support, the company said it could file for Chapter 11 as early as late December.

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