Rural Cellular to exchange 11 3/8% preferred stock for 11 3/8% debentures

By Angela McDaniels

Seattle, April 13 - Rural Cellular Corp. said it will exchange its $115.5 million of 11 3/8% senior exchangeable preferred stock for new 11 3/8% senior subordinated debentures due May 15, 2010 on May 15.

The company will also pay all accrued dividends on the preferred stock on May 15. The record date for these dividends - which will be about $355.40 per share, including accrued interest - is May 1.

The dividends will total $41 million and will be paid from existing cash, according to a company news release.

In addition, Rural Cellular will pay dividends on its 12.25% junior exchangeable preferred stock on May 15. The record date for these dividends is also May 1.

The dividends will be about $128.24 per share, including accrued interest, will total $32.8 million and will be paid from existing cash.

They represent the quarterly dividends payable on the 12.25% preferred stock on Aug. 15, 2006, Nov. 15, Feb. 15 and May 15 and will reduce the number of unpaid quarterly dividends to five.

The Alexandria, Minn.-based wireless communication services provider said it negotiated an amendment to its revolving credit facility that allows the dividend payments and replaced all financial covenant ratios with one new senior secured first-lien debt covenant.

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