Talk America to exchange 94% of 4½% convertibles, 95% of 5% convertibles

New York, April 2 - Talk America said it will accept $57.9 million principal amount - equivalent to 94% - of its 4½% convertible subordinated notes due September 2002 and $17.2 million principal amount or 95% of its 5% convertible subordinated notes due December 2004.

The Reston, Va. integrated communications provider had been running an exchange offer which expired at midnight ET on April 1.

For the 4½% convertibles tendered, Talk America will issue $53.2 million principal amount of new 12% senior subordinated PIK notes due 2007, $2.8 million principal amount of new 8% convertible senior subordinated notes due 2007 and $500,000 in cash.

For the 5% convertibles tendered, the company will issue $17.2 million principal amount of new 12% senior subordinated PIK notes due 2007.

Holders will also receive accrued interest.

The exchange will leave $3.9 million of the existing 4½% convertibles and $0.9 million of the existing 5% convertibles outstanding.

"This is the last step in our financial restructuring that we began last September and involved obligations to AOL and our senior lender, MCG Capital. With this behind us, we can now devote all of our energy to building a large and profitable base of local customers," said Gabe Battista, chairman and chief executive officer of Talk America, in a news release.

When Talk America first announced the tender on Feb. 22 it warned that if the debt restructuring was not successful it might have to file for bankruptcy.

The company announced the exchange for all its outstanding public convertible securities in an effort to extend maturities and eliminate a trigger that allows holders to put the securities if Talk America's stock ceases to trade on an established over-the-counter market.

The exchange offer was amended on March 5, setting a minimum amount for part of the transaction to be completed, pushing back the expiration date and increasing the interest rate and changing other terms on one of the securities being offered in the exchange.

Talk America required that at least 90% of the outstanding 4½% convertibles be tendered for the exchange of those securities to go ahead. There was previously no minimum.

Under terms of the offer, for each $1,000 principal amount of its $61.844 million of 4½% convertible subordinated notes due 2002, Talk America was offering either $1,000 principal amount of new 12% senior subordinated PIK notes due 2007 or $600 principal amount of new 8% convertible senior subordinated notes due 2007 and $100 in cash.

For each $1,000 principal amount of its $18.093 million of 5% convertible subordinated note due 2004, the company offered $1,000 principal amount of new 12% senior subordinated PIK notes due 2007.

The new 12% notes and the new 8% convertibles will both mature Aug. 15, 2007. The new convertibles will have a conversion price of $5 per share. Both series of notes are callable at any time at par.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.