ITC^DeltaCom files prepackaged Chapter 11

New York, June 26 - ITC^DeltaCom, Inc. made a prepackaged Chapter 11 filing after agreeing a reorganization plan with an unofficial committee representing holders of 62% of its senior notes and 74% of its convertibles notes.

The West Point, Ga. telecommunications company made the filing in the U.S. Bankruptcy Court for the District of Delaware. The filing covers only the parent company.

ITC^DeltaCom said the proposed reorganization will eliminate $515 million of debt and give it "a much improved capital structure and liquidity position."

Under the terms of the proposed restructuring, holders of ITC^DeltaCom's $415 million of senior notes will receive 81.5% of the reorganized company's common stock.

Holders of the $100 million principal amount of subordinated convertible notes will receive 5% of the reorganized company's stock.

Holders of the existing common stock, series A preferred stock and series B preferred stock will receive a total of 1% of the reorganized company's common stock.

Campbell B. Lanier, III, a director and current stockholder, and SCANA Corp., a current stockholder, have each agreed to purchase $15 million of a new issue of the reorganized company's convertible preferred stock. The securities will be convertible into a total of 10.5% of the reorganized company's common stock, and the purchasers also will receive warrants to purchase up to an additional 2% of the stock. Lanier and SCANA will also receive 2% of the reorganized common stock.

ITC^DeltaCom will also make a rights offering to its existing common and preferred stockholders allowing them to purchase on a pro rata basis, up to a specified amount, the convertible preferred stock and warrants that Lanier and SCANA have agreed to purchase. Any purchases made in the rights offering will reduce the commitments of Lanier and SCANA.

Assuming repayment of some capital lease obligations, the company said it expects to cut its debt to $194 million of borrowings under its senior credit facility and capital leases compared to $724 million at March 31, 2002.

ITC^DeltaCom said it has $23.2 million in cash currently available and does not need or expect to obtain debtor-in-possession financing.

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