Alamosa receives support of 68% of noteholders, modifies, extends exchange

New York, Oct. 15 - Alamosa Holdings, Inc. said that after modifying its exchange offer it has received commitments from holders of 68% of its existing notes to support and tender into the exchange and vote in favor of its prepackaged plan of reorganization.

Based on the support of more than two-thirds of noteholders, Alamosa said it is extending the exchange offer and voting deadline on the prepackaged plan to 5.00 p.m. ET on Oct. 29 from 5.00 p.m. ET on Oct. 15.

"The modifications we made to the exchange offers were needed to ensure its success, which is in the best interest of Alamosa and its stakeholders," said David E. Sharbutt, chairman and chief executive officer of Alamosa Holdings, Inc., in a news release. "After having already received agreements from approximately 68% of our note holders to tender into the exchange offers and to vote in favor of the pre-packaged plan, we remain focused on reaching our target of 97% acceptance by the Oct. 29, 2003 deadline and in achieving our long-term goals for Alamosa."

Under the modifications to the offer, Alamosa increased the dividend on the series B preferred stock to 7.5%, payable quarterly in kind, series C preferred stock, common stock or cash for the first 4.75 years and in cash after that. Previously it was payable quarterly at 6% in kind for the first five years and 4.5% in cash after that.

The new series C preferred has a conversion price of $4.25 but is otherwise identical to the series B preferreds, which convert at $3.40.

Alamosa said if all dividends are paid in series C preferred stock until July 2008 and neither series B or series C is redeemed before maturity then the two series could potentially result in an additional 6.9% dilution of its common stock.

Under the modifications, Alamosa can now redeem the preferred stock starting in year four at a premium of 25%, declining by 5% per year after that. Alamosa will no longer have the right to "automatically convert" the remaining preferred shares to common stock once two-thirds of the preferred shares are converted.

Alamosa also eliminated the contingent value rights from the exchange. The rights had been included as additional compensation if Alamosa's common stock did not trade above the $3.40 target price during a six-month period after the close of the exchange.

As of the close of business on Oct. 15 before the modified terms, $233.2 million principal amount of 12½% senior notes due 2011 and 13 5/8% senior notes due 2011 and $185.5 million principal amount of 12 7/8% senior discount notes due 2010 had been validly tendered and not withdrawn.

The Lubbock, Texas Sprint PCS affiliate originally announced the exchange on Sept. 12, saying it had the support of an ad hoc committee of bondholders owning 45% of its debt.

If the offer is not successful - Alamosa requires that holders of 97% of its notes tender their securities - the company said it will execute the restructuring through a prepackaged Chapter 11 filing.

Alamosa described the exchange as the final step in a financial restructuring intended to deleverage the company and stabilize its "key business relationships."

Agreements with Sprint have already been renegotiated as have some terms of its senior secured credit facility, with both subject to completion of the exchange. The renegotiated Sprint agreements will provide "long-term pricing predictability for service bureau fees and stability to the rates charged for inter-service area fees," Alamosa said. The amended credit facility, already unanimously approved by lenders, eases covenants for the senior leverage ratio, leverage ratio, fixed charge coverage ratio, interest expense coverage ratio and pro forma debt service coverage ratio.

The restructuring plan will reduce debt by $240 million principal amount and save $260 million in cumulative cash interest expense and expected economic benefits from changing the Sprint agreements.

"Collectively, the restructuring and amendments to the Sprint agreements will allow management to focus on maximizing its business plan and capitalizing on growth opportunities while preserving Alamosa's flexibility to pursue attractive business acquisitions and combinations," Alamosa said in a news release.

Under the original terms, the new preferred stock on offer to bondholders will convert to 35% of Alamosa's stock on a fully diluted basis. The contingent value rights will be tied to the performance of Alamosa's stock in the six months after the exchange is completed and offer payments below the conversion price of the preferreds.

For Alamosa's $400 million total principal amount of 12½% senior notes due 2011 and 13 5/8% senior notes due 2011, the company is offering $260 million in Alamosa (Delaware), Inc.'s new 11% senior notes due July 31, 2010 at the rate of $650 new notes per $1,000 principal amount of existing notes and 400,000 units made up of one share of series B convertible preferred stock of Alamosa and 73.61 contingent value rights at the rate of one unit per $1,000 principal amount of existing notes. Holders will also receive accrued interest.

For the $298 million accreted amount of senior discount notes due 2010, the company is offering $194 million in Alamosa (Delaware)'s new 12% senior discount notes due July 31, 2009 with a zero-coupon through July 31, 2005 at the rate of $650 new notes per $1,000 accreted amount of existing notes and 298,000 units at the rate of one unit per $1,000 accreted amount of existing notes.

The preferred stock will have an initial liquidation preference of $250 per share, with quarterly interest accruing at 6% for the first five years from issuance. After that the preferreds will pay cash dividends at 4.5% of the accreted value to maturity on July 31, 2013. These interest rates were increased under the modified terms.

Based on an initial conversion price of $3.40, the preferred stock will be convertible into 51.4 million shares of Alamosa's common stock, representing approximately 35% of the equity on a fully converted, fully diluted basis.

The CVRs, eliminated under the modified terms, entitle the holders to receive additional cash payments, debt or common stock depending on the performance of Alamosa's common stock for the period ending six months from the close of the restructuring transactions. Cash payments will be subject to some restrictions under the credit facility.

Under the CVRs, Alamosa will pay the amount by which $3.40 exceeds the greater of either the weighted average price of Alamosa stock during the six months following completion of the exchange or $2.82. Alamosa may make the payment in cash - but only if there are no borrowings on its credit facility - in stock using shares valued at $2.82 or in new notes. If the stock trades above the $3.40 target price for 20 out of 30 trading days the rights are extinguished.

The exchange requires that holders of 97% of the face amount of the existing notes tender their securities. If that level is not achieved, Alamosa said it would consider whether to make a prepackaged filing on the same terms and including the same amendments to the Sprint agreements and senior credit facility. For a restructuring in court Alamosa would need the support of two thirds by principal amount and 50% by number from bondholders. Alamosa is soliciting consents for a bankruptcy filing alongside the exchange offer.

The exchange originally expired at 5.00 p.m. ET on Oct. 10 unless extended.

Wells Fargo (612 316-4305) is the exchange agent and information agent.

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