SR Telecom exchanges 99.3% of 8.15% debentures, interest for new 10% debentures

By Jennifer Chiou

New York, Aug. 19 - SR Telecom Inc. said it exchanged C$70.5 million or 99.3% of its $71 million of 8.15% debentures due Aug. 31 under its exchange offer, which expired at 5 p.m. ET on Aug. 18.

In addition to the C$70.5 million of debentures, SR Telecom also exchanged C$4.8 million in accrued interest for a total of C$75.3 million of new 10% secured convertible debentures due Oct. 15, 2011.

The exchange was part of SR Telecom's recapitalization plan it announced in May, when it closed a $39.6 million operating credit facility with some holders of its 8.15% debentures.

Based in Montreal, the broadband wireless access equipment maker also said it received the required consents to amend the terms of the 8.15% debentures, extending the maturity to coincide with the maturity date of the 10% debentures and removing covenants.

The company may pay interest on the 10% debentures in cash or in kind via additional debentures. The 10% debentures are convertible into SR Telecom stock at 4,606 shares per C$1,000 principal amount.

On the earlier of the business day following the record date for a possible rights offering and Nov. 30, C$10 million of 10% debentures will be converted into 46,060,892 shares of the company.

As previously announced, as part of its recapitalization, SR Telecom is planning a rights offering to its shareholders, offering them the right to subscribe for up to $40 million of new common shares at a price to be determined, but no less than a 20% premium to the conversion price of about C$0.21 of the new debentures.

As already reported, the first C$25 million raised under the rights offering will be used for working capital and general corporate purposes, and anything in excess of C$25 million will be applied half to working capital and general corporate purposes and half to a redemption of the new debentures at 95% of par.

On July 21, SR Telecom launched the exchange offer and said it had already entered into a lock-up agreement with holders of C$67 million or 95% of the 8.15% debentures.

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