Broadview gets holder OK to restructure 11 3/8% notes; filing planned

By Susanna Moon

Chicago, July 13 - Broadview Networks said it secured investor support for a comprehensive financial restructuring plan to convert its $300 million of 11 3/8% senior secured notes into new five-year notes.

Under the terms of the restructuring, Broadview Networks will convert the notes into a combination of new five-year notes and the vast majority of the equity in the reorganized company. Existing preferred equity holders will receive a portion of the primary equity, as well as warrants to purchase additional equity in the reorganized company, according to a company press release.

The company reached an agreement Friday with holders of 70% of its outstanding preferred stock and those representing about 66 2/3% of its outstanding 11 3/8% notes, according to an 8-K filing with the Securities and Exchange Commission.

To facilitate the changes, the company said it plans to implement a pre-packaged plan of reorganization in a brief, court-supervised Chapter 11 process.

The company said it plans to complete the financial restructuring in the fourth quarter of 2012.

The plan will wipe out half of the debt under the company's existing senior secured notes, allowing the company to benefit from greater financial flexibility and liquidity to pursue cloud-based growth opportunities nationwide, the release noted.

The debt reduction will lower the company's interest expense by $18 million per year.

"We are excited to have reached an agreement with our noteholders and major equity holders on a consensual financial restructuring plan that will equitize a significant portion of our bonds and put Broadview Networks in a financially stronger position," Michael K. Robinson, president and chief executive officer of Broadview Networks, said in the release.

Broadview is a network-based business communications provider based in Rye Brook, N.Y.

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