RCN defers $10.3 million interest payment, negotiations continue

By Jeff Pines

Washington, Jan. 15 - RCN Corp. has decided to defer making the Jan. 15 interest payment of $10.3 million on its 10 1/8% senior notes due 2010 even though it has the resources to do so, the company said.

If the payment is not made by Feb. 13, the noteholders could declare a default, according to the indenture.

The Princeton, N.J.-based facilities-based telecom company said it is continuing its negotiations with an ad hoc committee of senior note holders. The decision to defer the payment was made in consultation with its lenders.

No agreement has been reached yet, but the negotiations are moving in the direction of converting a significant portion of the notes into equity, which would heavily dilute the company's equity, RCN said.

"All of our discussions with the company contemplate the conversion of a substantial portion of the bonds into equity," said Russ Belinsky of Chanin Partners, the noteholders' financial advisor, in a press release.

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