Marconi plc debt-for-equity talks with bondholders, banks progress

Marconi plc (C) said on Thursday (June 20) that it continues to make "good progress" in its three-way restructuring discussions with its syndicate banks and an ad hoc committee of its bondholders; the talks are aimed at a consensual recapitalization of Marconi. The company said that the recapitalization process is likely to involve a debt-for-equity swap for "a significant proportion" of Marconi's £4.3 billion ($6.4 billion) of gross financial indebtedness, which the board expects will lead to "a very substantial dilution in value" for existing equity holders. Marconi said it expects to shortly be de-listed by the Nasdaq (where its London Stock Exchange-based shares trade as American Depositary Receipts, and it expects to subsequently trade its ADRs on the Over The Counter Bulletin Board. The company expressed confidence that its banks and bondholders would continue to be supportive as it tries to "significantly" improve its balance sheet. AS PREVIOUSLY ANNOUNCED, Marconi, a London-based telecommunications equipment maker, said on Oct. 12 that it was considering buying back some of its bonds in an effort to cut its debt, but said no decision had been made at that time. The company was then estimated to have some £4.4 billion ($7 billion) of debt outstanding, although it has said it hoped to bring that debt load down to between £2.7 billion and £3.2 billion ($4.3 billion to $5.1 billion) by March 31. The company did not say which of its bonds might possibly be bought back, or at what price, and offered no timetable for any debt buyback. On January 15, the company said that in December, it had spent £101 million, including about £9 million of transaction costs and accrued interest, to buy £178 million (face amount) of the two series of eurobonds and the two series of dollar bonds. It said it had purchased 8.6% and 19.7% of its 2005 and 2010 eurobonds, respectively, as well as 5% of its 2010 dollar bonds. The bonds were repurchased at an estimated price of 52 cents per share. On Jan. 17, Marconi said that it had repurchased €84.9 million of outstanding euro-denominated bonds and $216.1 million of outstanding dollar-denominated bonds. The total face amount of the repurchased securities was £200 million, or approximately $286 million, figuring an exchange rate of $1.43 per pound. Marconi paid an average price of 55% of face value, for a total cash expenditure, excluding transaction fees, of £110 million, or approximately $157.3 million. The buyback - the latest of several - occurred four days before crucial talks with the company's lenders. In privately negotiated transactions through its Ancrane Ltd. unit, Marconi bought back €24.9 million principal amount of its €500 million of 5 5/8% eurobonds due 2005, €60 million principal amount of its €1 billion of 6 3/8% eurobonds due 2010, $86 million principal amount of its $900 million of 7¾% yankee bonds due 2010 and $130.1 million principal amount of its $900 million of 8¾% yankee bonds due 2030. Marconi said that following the latest repurchase, it had €432.1 million of the 5 5/8% and €743.3 million of the 6 3/8% eurobonds remaining outstanding, and $769 million of each of the 7¾% and 8¾% dollar bonds. Marconi said that it might buy back additional bonds in the future if terms are favorable, but said that it was not seeking at that time to make more repurchases.

PCA sells new bonds to redeem existing sub notes

PCA International, Inc.(B3/B-) was heard by high yield market syndicate sources on Thursday (June 20) to have sold a slightly upsized $165 million offering of seven-year senior notes, with a portion of the proceeds slated to redeem the company's existing subordinated notes. AS PREVIOUSLY ANNOUNCED, PCA International, a Matthews, N.C.-based provider of professional portrait photography products and services, had originally planned to sell $200 million of seven-year senior notes, with a portion of the proceeds to be used to redeem its $104 million of existing subordinated notes (the rest would have been used to pay down some of its bank debt), but was heard by syndicate sources on April 26 to have withdrawn the deal when investors demanded too much interest. However, on June 13, PCA was heard by the sources to have come back to the market with a slimmed-down $160 million Rule 144A offering, which included structural changes to the new notes. The deal was brought to market via book-running manager Goldman Sachs & Co. and co-manager Banc of America Securities .

Copamex shelves bond deal aimed at re-financing 11 3/8% '04 notes

Copamex SA de CV (B2/BB-) was heard by high yield syndicate sources on Thursday (June 20) to have postponed its planned $200 million offering of seven-year senior notes, a portion of the proceeds of which were to have been used to refinance the company's outstanding 11 3/8% senior notes due 2004. The sources said the company cited market conditions as its reason for having shelved the new note offering. Copamex did not immediately disclose any alternate plans for the existing 11 3/8% notes. AS PREVIOUSLY ANNOUNCED, Copamex, a Monterrey, Mexico-based paper products producer, was heard by high yield syndicate sources on June 7 to be preparing to market its prospective new deal via a roadshow. Proceeds were to be used to redeem the $180 million of remaining outstanding 11 3/8% notes (out of the $200 million originally issued) via an exchange offer for the new seven-year unsecured notes and/or a cash tender offer. The remainder of the proceeds were to have been used to repay short-term debt. The Rule 144A deal was to have been brought to market via book-running manager Salomon Smith Barney.

Riviera sells bonds, will defease 10% '04 notes and call 13% '05 debt

Riviera Holdings Corp. (B2/B+) was heard by high yield syndicate sources on Wednesday (June 19) to have sold a slightly upsized $215 million offering of eight-year senior secured notes via book-running manager Jeffries & Co.; proceeds of the deal are to be used to defease Riviera Holdings Corp.'s 10% first mortgage notes due 2004 and to call subsidiary Riviera Black Hawk Inc.'s. (B2/B-) 13% first mortgage notes due 2005. AS PREVIOUSLY ANNOUNCED, Riviera Holdings, a Las Vegas-based gaming company, said on June 6 that it planned to offer approximately $210 million in of new Rule 144A senior secured notes, with a portion of the proceeds from the offering to be used to repay, redeem or repurchase its outstanding 10% notes and the Riviera Blackhawk 13% notes. Riviera, said the proposed note offering would likely close during the current 2002 second quarter.

Versatel heads for Chapter 11, bondholders to get cash, equity

Versatel Telecom International NV (D) said on Wednesday (June 19) that it had began a "suspension of payments proceeding" in the Netherlands and that it will also be commencing a corresponding Chapter 11 proceeding in the U.S. The company said the action - which affects the holding company only and not its affiliates, is being taken to accelerate Versatel's financial restructuring. Versatel said the move to carry out the financial restructuring through the proceedings has the support of bondholders, including the bondholder committee, which now represents owners of more than 65% of the original principal amount of Versatel's outstanding high-yield and convertible notes. During the court proceedings, Versatel will seek votes from all bondholders in favor of the restructuring. Given the current level of bondholder support, the company does not foresee difficulties in obtaining sufficient votes. Versatel said the restructuring - to be carried out through a voluntary pre-arranged agreement known in Holland as an Akkoord - is intended to eliminate all of the company's outstanding debt. Versatel is believed to currently have approximately €1.7 billion ($1.61 billion) of outstanding high-yield debt. Bondholders will receive €338 million in cash and 80% of the stock of the reorganized company in exchange for cancellation of the bonds. Holders of Versatel's two series of 13¼% senior notes due 2008 ($225 million and $150 million) will receive $245 and 233.77 shares per $1,000 principal amount; holders of its $180 million of 11 7/8% senior notes due 2009 will receive $227.50 and 233.77 shares per $1,000 principal amount ; holders of the €120 million of 11 7/8% senior notes due 2009 and the €300 million of 11¼% senior notes due 2010 will receive €227.50 and 203.45 shares per €1,000 principal amount, and holders of the €300 million of 4% senior convertible notes due 2004 and the €360 million of 4% senior convertibles notes due 2005 will receive €172.50 and 234.37 shares per €1,000 principal amount. In addition to those amounts, Versatel will pay all accrued interest through March 31, which amounts to approximately €11 million; any interest on any series of bonds which has been paid by Versatel after March 31 will reduce the cash offered in the restructuring. Existing shareholders will meantime retain 20% of the equity and warrants exercisable for two years to buy a further 4% of the stock at €1.50 per share. Because it is now taking a court-supervised route to restructuring its debt, Versatel said it will be withdrawing its previously announced registered exchange offer. Versatel expects to emerge from Chapter 11 by the end of September. AS PREVIOUSLY ANNOUNCED, Versatel, an Amsterdam-based telecommunications operator, said on March 21 that it had reached agreement with an ad hoc bondholder committee on the terms and conditions of a revised exchange offer and related consent solicitation covering all of the company's outstanding high yield and convertible notes (subsequently withdrawn in favor of the court-supervised reorganization). Versatel said that the ad hoc committee, whose members collectively at that time held about 33% of the company's outstanding notes (since enlarged to include the holders of 65% of the notes), was part of a wider group of bondholders that collectively owned approximately 74% of the notes. Versatel said the members of the committee agreed to support the revised exchange offer and consent solicitation, which the company said it planned to formally launch as soon as practicable following the filing with the Securities and Exchange Commission of proper paperwork reflecting the revised agreement. Under terms of the agreement, bondholders were to be offered an amount in cash and Versatel shares in return for tendering their notes and providing their consents to proposed indenture changes. Versatel said it would offer the holders of its $375 million of dollar-denominated 13¼% senior notes due 2008 (consisting of two tranches of $225 million and $150 million) $220 in cash plus a $25 consent payment, and 233.77 Versatel shares, per $1,000 principal amount. It would offer the holders of its $180 million of dollar-denominated 11½% senior notes due 2009 $202.50 in cash plus a $25 consent payment and 233.77 shares per $1,000 principal amount. It would offer the holders of its €120 million of euro-denominated 11½% senior notes due 2009 €202.50 in cash plus a €25 consent payment and 203.45 shares per €1,000 principal amount. It would offer the holders of its €300 million of euro-denominated 11¼% senior notes due 2010 €197.50 in cash plus a €25 consent payment and 203.45 shares per €1,000 principal amount. It would offer the holders of its €300 million of euro-denominated 4% senior convertible notes due 2004 and its €360 million of euro-denominated 4% senior convertibles notes due 2005 €147.50 in cash plus a €25 consent payment and 234.37 shares per €1,000 principal amount. Versatel said that assuming 99% of the bondholders tender their bonds in the exchange offer (completion of the offer is conditioned upon achieving this minimum participation level), this would result in a cash payment of approximately €308 million. The consent payment would be payable only to those high yield bondholders tendering their dollar- or euro-denominated notes during the first seven days of the exchange offer without withdrawing their notes prior to the expiration of the exchange offer and to convertible bondholders tendering their notes during the exchange offer without withdrawing the notes prior to the expiration of the offer. It said that should 99% percent of the bondholders meet these requirements, this would result in a total consent payment (in addition to the basic tender offer consideration) of approximately €42 million. Versatel additionally said that it intends to pay all accrued interest through March 31. Interest paid after that on any series of notes would be reduced from the cash offered to the holders of the respective series of such notes. The aggregate amount of shares offered represents approximately 80% of the company's shares that would be outstanding immediately following the completion of the exchange offer, assuming 99% of the currently outstanding notes are exchanged. That figure does not include any impact of the warrants that would be issued to existing shareholders (concurrently with the completion of the debt exchange offer, current shareholders would be issued warrants entitling them to 1 share of stock for every 4.80 shares held with a strike price of €1.50, exercisable at any time within 2 years. These warrants represent 4% percent of the shares that would be outstanding immediately following completion of the exchange offer. Versatel said the principal purpose of the exchange offer would be to eliminate substantially all of its outstanding debt and interest expense. The principal purpose of the related consent solicitation would be to eliminate or modify substantially all of the restrictive covenants and other provisions of the notes, in order to enhance the company's future financial and operating flexibility. Versatel said it would also be soliciting from its holders their irrevocable support for a plan of composition that might be filed pursuant to a "suspension of payments" proceeding with a Dutch court and possibly for a plan of reorganization that may be filed under Chapter 11 with a U.S. court. It said that if holders of at least 75% of the notes were to vote in favor of the restructuring, but less than the required 99% percent of the outstanding notes were tendered in the exchange offer, Versatel planned to begin a court procedure in The Netherlands and, potentially, in the U.S., to complete a total restructuring of its notes. It said this alternative plan had the support of the ad hoc noteholders' committee. Versatel further said that any court procedure which the company might enter into would only involve Versatel Telecom International NV, which is a holding company, and not any of its operating subsidiaries that hold substantially all the fixed assets and contracts relating to employees, suppliers and customers. As a result, it said, any potential court procedure would - in principle - not impact upon any service or obligation to customers, suppliers, employees or other existing creditors (except for holders of the notes), since these are not at the level of the holding company. Besides being conditioned upon the tender of 99% of the total outstanding notes, completion of this transaction would be subject to approval and a share capital increase by the company's shareholders. If completed, the exchange offer would reduce interest-related cash expenditures by approximately €150 million annually, thereby improving Versatel's balance sheet and funding gap. The extraordinary gain from the early retirement of its notes would also create a substantially positive net equity position for the company. Versatel said it believed that upon completion of the exchange offer, its remaining cash balance, together with anticipated cash flow from operations, would provide it with sufficient capital to fund its operations to at least the beginning of the second quarter 2003. But Versatel warned that if the exchange offer were unsuccessful, the current capital structure were to remain in place and and current conditions in the capital markets were to prevail, it might not be able to raise additional capital to fund operations beyond the beginning of 2004.

Telewest bondholders reject Liberty Media offer

A committee representing a majority of the holders of all of Telewest Communications plc's (Caa3/BB-) publicly issued bonds said on Wednesday (June 19) that it was rejecting the tender offer for the bonds previously announced by Liberty TWSTY Bonds, Inc., a subsidiary of Liberty Media Corp. (Baa3/BBB-). The committee said its members - which own more than 50% of Telewest's notes - said they will not participate in the offer. The members of the committee said in their statement that they consider acceptance of the Liberty tender offer to be "not in their best interests." The committee added that it wishes to discuss with Liberty and Telewest its own proposals for a restructuring, and was also asking for Liberty to disclose details of the restructuring plan which Liberty has stated, in its tender offer, that it intends to propose to Telewest. The committee has retained UBS Warburg LLC as its financial advisor and Cadwalader, Wickersham & Taft as its legal counsel. AS PREVIOUSLY ANNOUNCED, Liberty Media Corp., an Englewood, Colo.-based company with interests in a broad range of video programming, broadband distribution, interactive technology services and communications businesses both in the U.S. and abroad, said on June 12 that it would begin a tender offer for the notes and debentures of of London-based U.K. cable televison and broadband operator Telewest Communications plc through its wholly owned subsidiary, Liberty TWSTY Bonds, Inc. It said the tender offer would expire at 5 p.m. ET on July 11. It also set an early tender deadline of 5 p.m. ET on June 26, with holders tendering their bonds by that early deadline eligible to receive an additional payment of $30 per $1,000 principal amount of notes held or £30 per £1,000 principal amount as part of their consideration , depending on whether the bond in question is denominated in dollars or sterling. Both deadlines would be subject to possible extension. Liberty TWSTY said it would purchase A) up to $300 million principal amount of Telewest's 9 5/8% senior debentures due 2006 for a total price of $60 million, offering noteholders tender offer consideration of $410 per $1,000 principal amount, OR, for those noteholders tendering by the early tender deadline, $440 per $1,000 principal amount. It would purchase B) up to $350 million principal amount of Telewest's 11¼% senior notes due 2008 for a total price of $70 million, offering noteholders tender offer consideration of $420 per $1,000 principal amount, OR, for those noteholders tendering by the early tender deadline, $450 per $1,000 principal amount. It would purchase C) up to $350 million principal amount of Telewest's 9 7/8% senior notes due 2010 for a total price of $70 million, offering noteholders tender offer consideration of $415 per $1,000 principal amount, OR, for those noteholders tendering by the early tender deadline, $445 per $1,000 principal amount. It would purchase D) up to $1.536 billion principal amount of Telewest's 11% senior discount debentures due 2007 for a total price of $307.3 million, offering noteholders tender offer consideration of $420 per $1,000 principal amount, OR, for those noteholders tendering by the early tender deadline, $450 per $1,000 principal amount. It would purchase E) up to $500 million principal amount of Telewest's 9 ¼% senior discount notes due 2009 for a total price of $100 million, offering noteholders tender offer consideration of $332.50 per $1,000 principal amount, OR, for those noteholders tendering by the early tender deadline, $362.50 per $1,000 principal amount. It would purchase F) up to $450 million principal amount of Telewest's 11 3/8% senior discount notes due 2010 for a total price of $90 million, offering noteholders tender offer consideration of $292.50 per $1,000 principal amount, OR, for those noteholders tendering by the early tender deadline, $322.50 per $1,000 principal amount. It would purchase G) up to £180 million principal amount of Telewest's 9 7/8% sterling-denominated senior notes due 2010 for a total price of £36 million, offering noteholders tender offer consideration of £415 per £1,000 principal amount, OR, for those noteholders tendering by the early tender deadline, £445 per £1,000 principal amount. And it would purchase H) up to £325 million principal amount of Telewest's 9 7/8% sterling-denominated senior discount notes due 2009 for a total price of £60 million, offering noteholders tender offer consideration of £328.75 per £1,000 principal amount, OR, for those noteholders tendering by the early tender deadline, £358.75 per £1,000 principal amount. In addition, Liberty TWSTY Bonds will pay to all holders the accrued and unpaid interest on the principal amount of all tendered Telewest notes and debentures up to, but not including, the payment date. Liberty said that if the total amount of any series of securities that is validly tendered and not withdrawn by the expiration deadline exceeds the total offer amount for that series, then Liberty TWSTY Bonds would accept securities of that series for payment on a pro-rata basis. It said that the tender offer would be contingent upon, among other things, 20% of the aggregate principal amount of all of the outstanding securities subject to the offer having been validly tendered and not subsequently withdrawn by the tender offer expiration deadline. On June 17, a committee representing a majority of the holders of all of Telewest's publicly issued bonds said in a statement that it was skeptical that the consummation of the previously announced proposed tender offer by Liberty TWSTY Bonds would facilitate a restructuring or other resolution of Telewest's debt problems in the best interests of bondholders as a whole. The committee - which said it had approached Telewest's board concerning a debt restructuring - said it wanted to discuss "urgently" with both Liberty Media and with Telewest its own proposals for a restructuring of Telewest's publicly issued bonds. The group said that it was in the process of appointing financial advisers and said it had requested meetings with Telewest and Liberty Media that week. It further said that bondholders interested in joining or supporting the committee (which it said should not, at this stage, involve becoming restricted) should contact Andrew Wilkinson of Cadwalader Wickersham & Taft,(call 011 44 (0)207 170 8700) the legal advisers to the committee. Meantime, Lehman Brothers Inc.(call Scott Macklin at 800 438-3242 or 212 528-7581) is the dealer manager for the tender offer and and Mellon Investor Services LLC (call 888-788-1635) is the information agent.

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