iBasis plans exchange for 5¾% convertibles, to refinance 11½% notes

New York, April 28 - iBasis Inc. is planning to offer new 6¾% convertible subordinated notes due 2009 in exchange for its $38.2 million principal amount of 5¾% convertible subordinated notes due March 2005.

The Burlington, Mass., telecommunications company also plans to refinance its $25.2 million 11½% senior secured notes due January 2005.

The transactions are intended to refinance the company's $67.9 million of debt coming due within the next two years. If iBasis is not successful it warned in an S-4 registration statement filed with the Securities and Exchange Commission that it may not be able to meet its obligations.

The new convertibles will be offered on a one-for-one basis in exchange for the existing convertibles. They will have a higher coupon and a "significantly reduced" conversion price. The existing notes convert at $86.14 per share while the new notes will convert at $1.85. iBasis stock closed at $1.44 Wednesday.

The new notes will have a non-callable period and then a provisional call with a 150% hurdle and then a hard call from 2007 onwards.

The exchange is subject to conditions including the tender of at least 95% of the existing convertibles.

No timing was given on the exchange offer.

Imperial Capital LLC is the dealer manager for the exchange. D.F. King & Co. Inc. is the exchange agent.

iBasis also said in the registration statement that it plans to prepay the 11½% senior secured notes. It will also terminate various securities exchange agreements by paying $25.175 million in cash and issuing warrants for 5.176 million shares of common stock. The warrants will have an exercise price of $1.85 per share and will run for three years.

To fund the redemption, iBasis said it has a commitment of $25.2 million from a third party. In return it will issue new 8% three-year senior notes. However iBasis may also obtain the financing from other sources.

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