Multicanal noteholders start Chapter 11 action

By Peter Heap

New York, Jan. 30 - Three holders of notes issued by Multicanal SA began Chapter 11 proceedings against the company in the U.S. Bankruptcy Court for the Southern District of New York.

The holders, who all use the same mailing address and made the filing jointly, hold $159.97 million of Multicanal's notes between them.

The biggest owner of the notes is Argentinian Recovery Co. LLC, which owns $157.255 million of Multicanal's 9¼% notes due 2002, 10½% notes due 2007, 13.125% series E notes due 2009, 10½% series C notes due 2018 and series J floating-rate notes due 2003.

Argentinian Recovery said it acquired the notes on Nov. 18, 2003 when the members of the limited liability company contributed their notes. The members originally bought the notes a number of years earlier, dating back to October 1998.

Argentinian Recovery's filing was made by vice president Edward Dartley of WRH Partners Global Securities LP in Morristown, N.J.

Also making the Chapter 11 filing was WRH Global Securities Pooled Trust, which owns $2.706 million of Multicanal's 9¼% notes due 2002, 10½% notes due 2007 and 13.125% series E notes due 2009.

WRH Global Securities acquired the notes on Dec. 8 and in subsequent open market purchases.

Its filing was made by senior portfolio manager William Connors.

The third filer is Willard Alexander, who owns $10,000 of Multicanal's 13.125% series E notes due 2009, which he acquired in the open market for cash in 1999.

Buenos Aires, Argentina-based Multicanal is attempting to restructure is debt through an acuerdo preventivo extrajudicial under Argentinean law. It became effective on Dec. 12 after all the conditions were satisfied.

Under the APE, for each $1,000 principal amount of existing debt tendered in connection with the APE solicitation, holders can choose to receive either the par option of $1,050 principal amount of 10-year step-up notes or the combined option of $440 principal amount of either 7% seven-year notes or seven-year floating-rate notes and 641 class C shares of common stock.

In total, Multicanal is seeking to exchange $76.5 million principal amount of existing debt for $80.3 million of 10-year notes and $143.0 million principal amount of existing debt for $143.0 million of seven-year notes and to capitalize $181.9 million principal amount of existing debt. And it is looking to retire $130 million under the cash option.

No accrued and unpaid interest will be paid under the APE solicitation.

It is also offering a cash option in which it is seeking to buy up to $131 million of its existing debt at a price of $300 per $1,000 principal amount. Holders who select the cash option will be required to execute the APE.

The involuntary Chapter 11 filing was made on Jan. 28.

Meanwhile Multicanal made a filing under section 304 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York on Jan. 16 in a move to protect its Argentinean proceedings from any action in the U.S.

The case number for the involuntary Chapter 11 filing is 04-10523, while the section 304 proceedings are under case 04-10280.

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