RCN general unsecured claimsholders to get 100% of reorganized company's equity

By Jeff Pines

Washington, Aug. 23 - RCN Corp.'s senior noteholders will get 100% of the reorganized company's equity, according to the company's reorganization plan filed Friday with the U.S. Bankruptcy Court for the Southern District of New York.

The noteholders, who are members of the general unsecured claims class, have $1.189 billion in claims. The general unsecured claims class holds a total of $1.19 billion in claims.

RCN expects to issue more than 36 million shares to its creditors.

The shares will be subject to dilution by management incentive options and new warrants.

The noteholders can choose to get 25% of their claim in cash to a cap of $12.5 million for all claimsholders and a pro rata share of new common stock.

If the noteholders approve the plan, then the holders of preferred interest claims will get two-year warrants equal to 1.75% of the reorganized company's fully diluted equity. Common stockholders will get warrants equal to 0.25% of the reorganized company's equity. The strike price for the warrants will be $34.16.

Bank claims will be paid in full.

RCN, a Princeton, N.J.-based telecommunications provider, already has approval for a $460 million exit facility through Deutsche Bank.

The company continues to expect to emerge from its restructuring process during the fourth quarter of 2004.

RCN filed for bankruptcy on May 27. Its Chapter 11 case number is 04-13638.

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