Broadview Networks emerges from bankruptcy with new capital structure

By Caroline Salls

Pittsburgh, Nov. 14 - Broadview Networks Holdings, Inc. emerged from Chapter 11 bankruptcy when its plan of reorganization took effect on Tuesday, according to a Wednesday filing with the U.S. Bankruptcy Court for the Southern District of New York.

As previously reported, the plan was confirmed on Oct. 3.

With its new capital structure in place and the brief Chapter 11 process complete, Broadview said in a news release that it is a stronger, delevered company with the flexibility, balance sheet and liquidity to expand its cloud services market position.

According to the release, Broadview's leverage is now below the average of its peers.

As a result of the restructuring, Broadview said it has reduced its outstanding senior notes by 50% and reduced its annual interest expense by about $18 million. The company also has access to free cash flow that will partially be used for general working capital and growth opportunities.

Now that its pre-packaged plan has taken effect and all regulatory approvals have been obtained, Broadview said it has a new debt structure that includes $150 million of senior secured notes with a five-year maturity and a $25 million revolving credit facility.

"With our restructuring completed, we are a stronger company," president and chief executive officer Michael K. Robinson said in the release.

"Having recently obtained regulatory approvals, we are excited to begin the next phase and are committed to providing our customers with the best possible products and services."

The company said it did not sell any businesses or close any offices during the restructuring, nor did it impair its services levels.

Plan terms

The specific terms of the company's pre-packaged plan include the following:

• Holders of senior secured notes will receive their share of 97.5% of the common stock of the reorganized company and $150 million of new 10½% senior secured notes due 2017;

• The company's existing ABL facility obligations will be repaid in full and terminated if not previously repaid under a debtor-in-possession credit facility;

• General unsecured creditors will be unimpaired;

• A total of 2.5% of the reorganized company's new common stock and two series of eight-year warrants to purchase up to 11% of the new common stock and up to 4% of the new common stock, respectively, will be issued to holders of existing outstanding preferred equity interests; and

• The company's existing equity interests will be canceled and the senior secured notes will be retired.

Broadview is a network-based business communications provider based in Rye Brook, N.Y. The Chapter 11 case number is 12-13581.

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