FiberNet Telecom to convert bank debt to stock

By Sara Rosenberg

New York, Aug. 12 - FiberNet Telecom Group Inc. said it has reached agreement with its lenders to convert $66 million of its bank debt into common stock.

The New York, N.Y. fiber-optic network company said it has entered into a non-binding letter-of-intent with lenders under its senior secured facility, calling for the conversion of the bank debt into shares of common stock at a conversion price of about $0.15 per share. The proposed recapitalization would allow the company to streamline its capital structure and reduce outstanding indebtedness.

Availability under the company's credit facility will be reduced to $37 million from $105 million, The loan will consist of $23 million in outstanding term loans, $7 million in outstanding revolving loans and $7 million of outstanding letters of credit.

If the conversion is completed, the lending group would own approximately 60% of the company's fully diluted equity. The company anticipates closing on the conversion before Sept. 30.

"By undertaking this recapitalization, FiberNet will strengthen its capital structure and solidify its financial position. This will bolster our efforts to be a survivor in this brutal telecom environment," said Michael Liss, president and chief executive officer, in a company press release.

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