This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

The Deal: Otelco Seeks Equity in Ch. 11

NEW YORK ( TheStreet) -- Wireline telecommunication services provider Otelco Inc. has filed for bankruptcy with a prepackaged plan that would swap its subordinated debt for equity.

Shares fell 0.6% to $1.71 by mid-day on Tuesday.

The Oneonta, Ala., rural telecom provider in Alabama, Maine, Massachusetts, Missouri, New Hampshire, Vermont and West Virginia filed for Chapter 11 protection in the U.S. Bankruptcy Court for the District of Delaware in Wilmington on Sunday, March 24.

The company also filed motions seeking permission to administer its case along with 16 affiliates while asking for continued access to its cash management systems. A hearing on the first-day motions before Judge Mary F. Walrath had not been set as of Monday.

Under the proposed "pre-pack," Otelco's $162 million term loan would be exchanged for a new $142 million loan and a cash payment of up to $20 million, its disclosure statement said. The lenders would also receive a pro rata share of Otelco's new Class B common stock, which would represent a 7.5% stake in the company.

The new term loan's maturity would be extended to April 30, 2016, and it would be priced at Libor plus 350 basis points, with a 3% floor on Libor. The debt was originally set to mature on Oct. 31, 2013, filings with the Securities and Exchange Commission said.

GE Capital Corp. is the administrative agent on the term loan, GE Capital Markets Inc. is the lead arranger and sole bookrunner, and CoBank ACB is the co-lead arranger and lender. Otelco's $15 million revolver, which had no debt outstanding, would be reinstated with up to $5 million in availability.

Noteholders, including holders of its income deposit securities, would receive a pro rata share of Otelco's new Class A common stock, which represents the remaining 92.5% stake in the company. Otelco owes $117.9 million in principal and interest on 13% subordinated notes due 2019. Wells Fargo Bank NA is the indenture trustee on the notes.

General unsecured creditors, owed an estimated $1.1 million, would have their debt reinstated with the reorganized company. Administrative, priority, priority tax and other secured creditors would be paid in full. Current equity holders would be wiped out.
1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
GE $26.78 0.00%
AAPL $126.44 0.00%
FB $87.28 0.00%
GOOG $523.40 0.00%
TSLA $280.02 0.00%

Markets

DOW 17,730.11 -27.80 -0.16%
S&P 500 2,076.78 -0.64 -0.03%
NASDAQ 5,009.2140 -3.9090 -0.08%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs