Jazztel reaches agreement on recapitalization

New York, June 13 - Jazztel plc said it reached agreement with an ad hoc committee of holders of its senior notes on a recapitalization which will exchange the debt for equity, convertibles and cash.

Under the proposed restructuring, the outstanding €676 million of senior notes would be exchanged for stock representing 88% of the company's equity and €75 million of new convertible notes.

In addition, cash held in escrow to secure the notes will be returned to noteholders.

Existing equity holders will be diluted to a 12% stake in the company after the recapitalization.

The new convertibles will mature in 2012, will carry a 5% interest rate payable in cash or in kind and will convert into a 17.5% stake in the company.

Jazztel said that subject to market conditions it will consider a rights issue after the recapitalization.

The agreement is non-binding and is subject to the delivery of definitive documentation. It also requires shareholder approval and support from noteholders. For the noteholder support, the plan must be backed by 75% of those voting and a majority must vote.

Jazztel's board has approved the transaction, the company said, adding that it is also supported by Martin Varsavsky, Jazztel's principal shareholder.

Jazztel will also need to renegotiate is current credit facility and backbone leases.

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