ATX emerges from bankruptcy

By Caroline Salls

Pittsburgh, April 27 - ATX Communications, Inc. emerged from Chapter 11 bankruptcy and its plan of organization became effective Wednesday, according to a company news release.

With its emergence from bankruptcy, ATX becomes a majority-owned subsidiary of Leucadia National Corp.

Under the plan of reorganization, Leucadia National will receive all the common stock of the reorganized company along with $25 million of new senior notes in exchange for the $170.2 million of pre-petition claims that it holds. No estimated recovery was given in the disclosure statement.

Leucadia also has a claim of $5.4 million under ATX's DIP facility, which will be paid in full for a 100% recovery.

There are $70 million to $80 million of general unsecured claims. Holders will share in $7 million of cash for a recovery of 8.75% to 10%, except for Verizon and SBC, which will be treated separately. Verizon has agreed to a $16.5 million cure payment and has waived its right to receive anything on its remaining $37.5 million claim until other holders in this class achieve a 15% recovery. SBC will receive 45% of the proceeds of the sale of ATX's Mid-West operations.

Subordinated claims from litigation relating to the company's 6% convertible subordinated notes will receive nothing.

Holders of ATX's old common stock and those with equity securities litigation claims will also receive nothing.

As part of its emergence, ATX will obtain a $25 million exit facility from Leucadia. Interest will be at 10%.

ATX will also issue $2 million of new promissory notes.

The U.S. Bankruptcy Court for the Southern District of New York confirmed the plan on April 13.

Jeff Coursen has been promoted to executive vice president and chief operating officer of ATX. Additional promotions include Tim Allen to executive vice president of sales and marketing; Guy Fardone, executive vice president and general manager of ATX's commercial division, and Chris Michaels, executive vice president, chief technology officer and general manager of the company's consumer division.

Thomas Gravina, the company's former president and chief executive officer, will continue as chairman of the board of directors.

ATX is a provider of internet and voice communications and managed security services. Leucadia National is a holding company in telecommunications, healthcare services, manufacturing, real estate, winery operations, development of a copper mine and property and casualty reinsurance.

ATX, a Bala Cynwyd, Pa.-based telecommunications company, filed for bankruptcy on Jan. 15, 2004. Its Chapter 11 case number is 04-10214.

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