E-mail us: service@prospectnews.com Or call: 212 374 2800
Bank Loans - CLOs - Convertibles - Distressed Debt - Emerging Markets
Green Finance - High Yield - Investment Grade - Liability Management
Preferreds - Private Placements - Structured Products
 
Published on 1/8/2004 in the Prospect News Distressed Debt Daily.

Allegiance Telecom's unsecured creditors object to auction procedure

By Jeff Pines

Washington, Jan. 8 - Allegiance Telecom Inc.'s official committee of unsecured creditors objected to the proposed sale procedure to auction the company's assets, according to a filing with the U.S. Bankruptcy Court for the Southern District of New York.

The committee asked the court to include it in making critical decisions involving the sale.

Dallas-based Allegiance is proposing to hold an auction on Feb. 12.

It is proposing to give Qwest Communications International Inc. stalking horse status in the auction with an agreement to buy most of Allegiance's assets for about $300 million and $90 million in convertible debt.

Allegiance asked the court in a December filing to give Qwest special status in the auction and for a Jan. 9 hearing to establish bidding procedures.

But the creditors said they believe any special status for Qwest will chill the competition for other bidders who might be willing to pay more for the company's assets.

A major concern is potential bidders won't have enough time to file their bids by Feb. 12, the creditors added. Potential bidders will have 19 business days from the Jan. 9 hearing to conduct due diligence, analyze all of Allegiance's businesses and submit a bid, they said. The committee wants the bid deadline extended to March 15.

The asset purchase agreement with Qwest comes with a $12.8 million break-up fee, which the creditors believe is excessive. They want it capped at $7.8 million, including all expense reimbursements.

Also, the committee has a long list of concerns with the purchase agreement, which includes the requirement for Allegiance to provide copies of qualified bids to Qwest since this would give the Denver-based telecommunications company an unfair advantage in the bidding.

Allegiance filed for protection under Chapter 11 on May 14.


© 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.