Allegiance Telecom clashes with three banks after June request to draw down revolver

By Sara Rosenberg

New York, Aug. 14 - Allegiance Telecom Inc. is in dispute with three of its lending banks - and may end up in court - due to the banks' hesitancy to fund their $14.7 million commitment under the revolving credit facility, according to a filing with the Securities and Exchange Commission. The company requested a draw of the remaining $150 million under its revolver in June and as of Aug. 14, 23 of the 26 banks had honored this request.

The three banks that are withholding the funds "have requested additional information before they will determine whether they believe they are required to fund," the filing said.

"We believe that these 3 banks are in default of the credit agreements and have notified them accordingly," the filing continued. "We are working with these 3 banks to resolve this dispute by providing additional information but we can provide no assurances that we will be able to do so and we may have to pursue our claims against them in court."

Interest on the revolver funds drawn down in June is 5.24% per annum and will remain fixed until December.

During the third quarter of 2001, the company drew $200 million under the revolver due Dec. 31, 2006 and $150 million under the delayed draw term loan due Dec. 31, 2006. The interest rate applicable to this draw is 5.53% per annum and will remain fixed until Sept. 19, according to the SEC filing.

Allegiance Telecom is a Dallas, Tex. telecommunications company.

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