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ITC^DeltaCom looking at notes exchange, raising more equity
New York, April 2 - ITC^DeltaCom Inc. said it is looking at the possibility of launching an exchange offer for its outstanding notes or of raising additional equity capital.
The West Point, Ga. telecommunications company said in a filing with the Securities and Exchange Commission it is looking at the options to "alleviate the significant constraints" on its liquidity.
ITC's current liquidity is not enough to cover its operating expenses and capital needs and "jeopardizes" its ability to continue as a going concern, the company said in the SEC filing.
At Feb. 28, it had $31.1 million of cash and equivalents, only enough, with cash flows from operations and other sources, to keep the company going through August without extra funds.
ITC^DeltaCom said it has hired a financial advisor to assist in evaluating alternatives.
Options being examined include raising more equity capital and/or launching an exchange offer for its notes. An exchange could be either for new debt or equity securities or a combination of cash and securities.
ITC said it is also looking at whether it can draw on an outstanding $150 million equity financing commitment made by ITC Holding Co., Inc., SCANA Corp. and HBK Master Fund LP.
So far, the company said, it has obtained $70 million through sales to these investors of series B preferred stock and common stock purchase warrants. The commitment expires on June 20, 2002.
However ITC's ability to obtain additional funds from this source is limited by a requirement that purchasers of its series B preferred stock, together with any other members of the same group under federal securities law, may not own more than 30% of the voting power of ITC's voting securities, as calculated under change of control provisions in its debt agreements.
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