Song Networks reaches agreement to restructure

New York, Sept. 9 - Song Networks Holding AB said it has reached agreement in principal on a financial restructuring that would exchange its existing debt for equity and see the injection of additional capital and assets into the company.

The agreement is with an ad hoc group of bondholders, Vattenfall AB and Stena AB, the company said in a new release.

After the restructuring, Song said it would be virtually debt free and fully funded.

Under the plan, Vattenfall and Stena will invest a total of SEK300 million in Song Networks. Song will also carry out a SEK100 million rights offering and issue SEK100 million of convertible bonds of which Stena will buy SEK15 million.

Song will acquire 100% of Arrowhead AB from Vattenfall in exchange for new Song shares. Arrowhead will add a cost-effective internet protocol and transmission network and improve coverage in Sweden.

The debt-for-equity swap will result in bondholders owning 95% of the company with existing shareholders owning the remaining 5%. Bondholders' stake will then be reduced to 60.0%, allowing for the investment from Vattenfall and Stena, the acquisition of Arrowhead, full conversion of the convertible bonds and completion of the rights issue. Vattenfall will own 19.68%, Stena 7.22% and current shareholders up to 13.11% depending their participation in the rights offering and the issue of convertible bonds.

The restructuring is subject to negotiation of definitive documentation and must be approved by Song's bondholders. The restructuring also depends on necessary approvals by Song's shareholders at an extraordinary general meeting, successful completion of an Akkoord process in The Netherlands and appropriate board and regulatory approvals.

Song said it expects to complete the restructuring within the next three months.

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