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Magyar Telecom details restructuring agreement with noteholders, had €12.5 million cash at mid-2013
By Lisa Kerner
Charlotte, N.C., Aug. 6 - Magyar Telecom BV, which provides telecommunications services through its subsidiary, Invitel Holdings A/S, reached a restructuring agreement with an ad hoc committee made up of holders of the company's 9½% senior secured notes due 2016, according to Invitel chief executive officer David McGowan.
Of the existing notes, €155 million will be retained or exchanged into new notes, according to McGowan.
"These reinstated notes will bear cash interest at a rate of 7% and PIK interest of 2%," he said. "Interest on the reinstated notes will accrue beginning on June 15, 2013 and will be paid semiannually in arrears on Dec. 15 and June 15."
McGowan added that the reinstated notes will have a PIK toggle that will allow the company to capitalize a portion of the cash interest at a rate of 9% "to the extent necessary for the company to maintain a minimum cash balance of €10 million."
The reinstated notes mature June 15, 2018.
McGowan said the remaining €174 million of existing notes, together with all accrued interest, will be converted into 49% of the pro-forma post-restructuring equity in the group.
On closing of the restructuring, the equity sponsor, Mid Europa Partners, will invest €25 million consisting of €15 million as equity and €10 million as debt, which will rank pari passu with the reinstated notes.
At June 30, Magyar had cash and equivalents of €26.5 million, third-party debt of €326.9 million, a leverage ratio of about 5.95 times pro forma EBITDA and "€12.5 million in the bank," said McGowan.
Magyar and its subsidiaries reported revenue for the first six months of €79.4 million, a 6% decline from the prior-year period.
Income from operations decreased to a loss of €6.1 million from an income of €3.5 million for the six months ended June 30, 2012.
Magyar is based in Budapest.
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