RCN asks court to approve $20 million increase in exit facility

By Jeff Pines

Washington, Oct. 25 - RCN Corp. asked the U.S. Bankruptcy Court for the Southern District of New York to approve a $20 million increase in its $460 million exit facility and to pay the fees for the amendment.

RCN filed its request Friday.

The Princeton, N.J.-based telecommunications provider said it needs the extra cash to help pay the $29 million it needs to buy the 50% of Starpower Communications LLC it does not own from Pepco Communications LLC. Pepco Communications is a unit of Pepco Holdings Inc., a Washington, D.C.-based utility.

After looking at financing alternatives, RCN decided that getting a $20 million increase from Deutsche Bank was the best deal it could get, but it needs the court to approve the amendment and the associated fees.

The confirmation plan for RCN is scheduled for Dec. 8, and the company expects to emerge from bankruptcy on Dec. 31, which is when the Starpower deal is supposed to close.

If the Starpower acquisition is consummated, RCN will pay an extra $550,000 for the 2.25% facility fee and 0.5% commitment fee; if not, it will pay Deutsche Bank an extra $100,000 for the commitment fee.

The amendment also will increase the amount that may be subject to a 1% fee, which is for funds deposited into escrow for RCN by Deutsche Bank but ultimately returned to the bank.

The $20 million can only be used for the Starpower acquisition, according to the letter.

A Nov. 16 hearing is scheduled.

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

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