Startec will not make interest payment, negotiating debt restructuring

New York, Nov. 15 - Startec Global Communications Corp. said it will not be making the coupon payment due Nov. 15 on its $160 million of 12% senior notes and added that it is negotiating a restructuring of the debt with bondholders.

Startec's payment would have been $9.6 million. The Potomac, Md. communications company said it has 30 days to cure the default.

In addition to negotiating with creditors, Startec said it is discussing raising new equity capital with potential investors.

But it warned that if it cannot raise additional financing or restructure its debt it may have to restructure, sell itself or liquidate.

Startec added that it may have to file for bankruptcy protection while it restructures its debt.

Startec also reported net revenues for the quarter ended Sept. 30 of $38.1 million, a decrease of $45.1 million or 54% compared to the $83.2 million in the same period of 2000.

Gross margin was 31% of revenues in the third quarter, up from 22% in the year-earlier period and 27% in the second quarter of 2001.

EBITDA (earnings before interest, taxation, depreciation and amortization) was $188,000 in the third quarter compared to an EBITDA loss of $2.9 million a year earlier and an EBITDA loss of $400,000 in the second quarter.

At Sept. 30 , Startec had cash and cash equivalents of $4.4 million.

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