RCN says restructuring may lead to exchange of "significant" amounts of notes, preferreds for stock

By Carlise Newman

Chicago, Nov. 12 - RCN Corp. said talks with consultants for its bank lenders and noteholders on a restructuring may result in "significant" amounts of senior notes and preferred stock being converted into common stock.

As of Sept. 30, RCN was in compliance with the covenants contained in all of its outstanding debt agreements, according to a filing with the Securities and Exchange Commission. However, in order for the company to meet its liquidity needs and continue complying with all debt covenants, through mid-2004 and beyond, it said it will have to outperform its business plan; improve operational efficiencies; raise additional capital through issuance of equity or debt securities; further amend its credit facility; restructure its balance sheet; significantly reduce capital deployment plans and new product introductions; or consummate additional asset sales.

RCN began the talks with holders of its senior notes and preferred stock on Oct. 7, with a view to repurchasing, exchanging or retiring the securities. The company also hired Merrill Lynch as financial advisor to review financial alternatives, capital structure and possible capital raising opportunities.

As previously reported RCN repurchased $75 million in principal amount of its publicly held senior notes for $28 million in August under a modified Dutch auction tender offer. The tender offer was originally for between $250 million and $290 million.

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