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MCG Capital Announces Restructuring Of Broadview Networks Holdings, Inc. Investment

Second graph, second sentence of release should read: ...approximately 66 2/3% of the Notes have consented to vote for the Plan... (sted ...more than 66 2/3% of the Notes have consented to vote for the Plan...)

The corrected release reads:

MCG CAPITAL ANNOUNCES RESTRUCTURING OF BROADVIEW NETWORKS HOLDINGS, INC. INVESTMENT

MCG Capital Corporation (Nasdaq: MCGC) (“MCG”) announced today that Broadview Networks Holdings, Inc. (“Broadview”), a majority-owned, control investment of MCG, has entered into an agreement with certain of its equityholders (including MCG) and noteholders providing for a restructuring of its outstanding obligations, including its $300 million 11 3/8% senior secured notes due in September 2012 (the “Notes”).

As disclosed in its filings with the SEC, Broadview has agreed to solicit consents to file a pre-packaged chapter 11 plan of reorganization (the “Plan”) with the U.S. Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”). The holders of approximately 70% of Broadview’s outstanding preferred stock (including MCG) and approximately 66 2/3% of the Notes have consented to vote for the Plan, subject to the satisfaction of certain terms and conditions, which percentages would be sufficient to approve the Plan. The Plan provides that upon the effectiveness of the Plan, the existing noteholders will exchange the Notes for new common stock representing 97.5% of the common stock of the reorganized company and $150 million in principal amount of new 10 1/2 % senior secured notes due in July 2017, and existing stockholders, including MCG, will each receive a pro rata share of the remaining 2.5% of the common stock of the reorganized company and two tranches of eight-year warrants with exercise prices set at equity values that imply full recovery for existing noteholders. All ownership percentages are subject to dilution by the exercise of warrants and equity to be issued under a management incentive plan. If the restructuring is consummated on the contemplated terms, MCG estimates that the value of its investment in Broadview on a post-restructure basis will be approximately $1 million.

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