Versatel files suspension of payments in Netherlands, to file Chapter 11 in US

New York, June 19 - Versatel Telecom International NV said it began a suspension of payments proceeding in The Netherlands and that it will also be commencing a corresponding Chapter 11 proceeding in the U.S.

The Amsterdam-based telecommunications company said the action, which affects the holding company only, is being taken to accelerate Versatel's financial restructuring.

Versatel said the move to carry out the financial restructuring through the proceedings has the support of bondholders including the bondholder committee, which now represents owners of more than 65% of the initial principal amount of Versatel's outstanding high-yield and convertible notes.

Versatel also said it has a commitment for a €150 million credit facility that will be available on completion of the restructuring.

The new credit line will fully fund the company's business plan and add financial and operating flexibility for the future, Versatel said.

GE Capital is providing the facility. Immediately on completion of the restructuring, €50 million will be available with the remaining €100 million subject to financial performance. The company's previously announced funding gap is less than €50 million, Versatel noted.

Versatel also said it expects to generate positive adjusted EBITDA in the second quarter of 2002, two quarters ahead of its prior guidance, and it expects full year adjusted EBITDA to exceed its prior guidance that it would be between breakeven and €5 million.

Because it is now taking a court-supervised route to restructuring its debt, Versatel said it will be withdrawing its registered exchange offer.

The restructuring - to be carried out through a voluntary pre-arranged agreement known as an Akkoord in the Netherlands - is intended to eliminate all of the company's outstanding debt.

Bondholders will receive €338 million of cash and 80% of the stock of the reorganized company in exchange for cancellation of the bonds. Holders of Versatel's $225 million 13¼% senior notes due 2008 and $150 million 13¼% senior notes due 2008 will receive $245 and 233.77 shares per $1,000 principal amount, holders of the $180 million 11 7/8% senior notes due 2009 will receive $227.5 and 233.77 shares, holders of the €120 million 11 7/8% senior notes due 2009 and €300 million 11¼% senior notes due 2010 will receive €227.50 and 203.45 shares and holders of the €300 million 4% senior convertible notes due 2004 and the €360 million 4% senior convertibles notes due 2005 will receivable €172.50 and 234.37 shares.

Existing shareholders will retain 20% of the equity and warrants exerciseable for two years to buy a further 4% of the stock at €1.50 per share.

Versatel expects to emerge from Chapter 11 by the end of September.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.