Cincinnati Bell offers stock for BRCOM 9%, notes, 12½% preferreds

New York, Aug. 1 - Cincinnati Bell Inc. (B2/CCC+) said it would exchange shares of its common stock for all of the outstanding 9% senior subordinated notes due 2008 and 12½% Series B junior exchangeable preferred stock issued by its Broadwing Communications Inc. subsidiary, now formally known as BRCOM Inc.

Cincinnati Bell said the exchange offers are an "integral part" of its restructuring plan. They will improve the company's financial position and reduce remaining cash expenditures, Cincinnati Bell said in a filing with the Securities and Exchange Commission.

The company also warned that if the exchange offer and consent solicitation are not completed it will evaluate its strategic alternatives for BRCOM which could include BRCOM filing for protection under Chapter 11.

Cincinnati Bell - a Cincinnati, Ohio-based provider of telecommunications services - is offering to exchange 241.06 shares per $1,000 principal amount of BRCOM 9% notes validly tendered. The company said that if the entire outstanding aggregate principal amount of BRCOM's notes is tendered, Cincinnati Bell will issue 11,076,707 new shares of its common stock.

Cincinnati Bell is also soliciting consents from holders to amend the notes' indenture, in order to eliminate all restrictive covenants.

The debt exchange offer is conditioned upon-among other factors - the receipt of valid tenders from holders of at least 95% of the outstanding BRCOM notes. Cincinnati Bell said that as of July 30, holders of approximately 94% of the outstanding amount have already agreed to tender their notes.

Cincinnati Bell also announced a separate but concurrent offer to exchange its common stock for all of BRCOM's outstanding shares of 12½% Series B junior exchangeable preferred stock. Preferred holders will receive 35.8 shares of Cincinnati Bell common stock for each outstanding preferred share which is validly tendered. If all of the outstanding BRCOM preferreds are tendered, the company will issue 14,148,518 new shares of its common stock. Concurrently with the preferred stock exchange offer, Cincinnati Bell is also soliciting consents from holders to amend the certificate of designation under which the shares were issued, to eliminate all voting rights and restrictive covenants.

The preferred stock exchange offer is conditioned upon, among other things, the receipt of valid tenders and consents from holders of at least 66 2/3% of the outstanding BRCOM preferred stock. The company said that as of July 30, holders of approximately 72.9% of the preferred shares have already agreed to tender their shares and give their consents.

If the preferred stock exchange offer and consent solicitation are completed, Cincinnati Bell will effect a merger of a newly-formed, wholly owned subsidiary into BRCOM. Any remaining shares of BRCOM preferred stock not tendered will be converted into the same number of shares of Cincinnati Bell common stock that the holders would have received if they tendered their shares in the exchange offer, unless the holders properly perfect appraisal rights under Delaware law.

Both offers expire at 5 p.m. ET on Aug. 29, subject to possible extension.

The dealer manager and solicitation agent for both exchange offers is Lehman Brothers Inc. (call 800 438-3242).

Details of note exchange:

http://www.sec.gov/Archives/edgar/data/716133/000104746903025586/a2113021zs-4a.htm

Details of preferred exchange:

http://www.sec.gov/Archives/edgar/data/716133/000104746903025587/a2113386zs-4a.htm

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