New York, April 17 - McLeodUSA Inc. emerged from Chapter 11 on Wednesday, putting the company's amended plan of reorganization into effect 75 days after its filing. The plan received approval from all voting classes of security holders and from the U.S. Bankruptcy Court, Delaware District on April 5.
In conjunction with the company's Chapter 11 emergence, McLeodUSA entered into a $110 million revolving credit facility due May 31, 2007, which may be increased to $160 million. The banking syndicate was led by J.P. Morgan Chase with Bank of America and Citibank acting as co-arrangers. In addition, the Cedar Rapids, Iowa communications company sold its directory publishing business to Yell Group Ltd. For $600 million, received $175 million from Forstmann Little & Co. in connection with the sale of new common stock and warrants to purchase new common stock and placed Jeffrey D. Benjamin on the Board of Directors as the representative for former noteholders.
Under the reorganization plan, McLeodUSA said it will distribute $670 million in cash to its senior noteholders, new Series A preferred stock, warrants to purchase new common stock and new common stock to its old preferred shareholders. The new common and preferred stock will begin trading on Nasdaq on April 18.
Holders of McLeodUSA's $3 billion of senior notes will receive a combination of cash, preferred stock and warrants to purchase Class A common stock. For each $1,000 of claims, noteholders will receive the distributions shown in Table 1.
Holders of McLeodUSA's preferred stock will receive common stock as shown in table 2.
Holders of McLeodUSA's old common stock and securities claims including claims under class action lawsuits will share 54,775,663 shares of new common stock. However no distribution will be made until the class action lawsuits are resolved or the bankruptcy court establishes a reserve and allows distribution of the remainder.
McLeodUSA said it believes the class action claims are without merit although the claimants say they should receive more than $300 million.
Table 1: Distribution to McLeodUSA noteholders
Cash Preferred shares Warrants
| 10½% discount notes | $218.30 | 3.26 | 7.22
|
| 12% notes | $234.58 | 3.50 | 7.76
|
| 11½% notes | $226.46 | 3.38 | 7.49
|
| 9¼% notes | $231.26 | 3.45 | 7.65
|
| 8 | 3/8% notes | $227.09 | 3.39 | 7.51
|
| 9½% notes | $225.36 | 3.36 | 7.45
|
| 11 | 3/8% notes | $234.86 | 3.51 | 7.77
|
| 8 | 1/8% notes | $228.38 | 3.41 | 7.55
|
| Total | $670 million | 10,000,000 | 22,159,091
|
|
|
|
|
| Table 2: Distribution to McLeodUSA preferred stockholders
|
|
|
| Shares per share | Total shares
|
| of preferred stock
|
| Series A preferred stock | 29.32 | 33,696,559
|
| Series D preferred stock | 284.38 | 78,203,135
|
| Series E preferred stock | 284.38 | 35,546,879
|
|
|
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