iBasis says 98% of 5¾% convertibles tendered, buys back 11½% notes

New York, June 18 - iBasis Inc. said that $37.3 million principal amount or 98% of its 5¾% convertible subordinated notes due March 2005 were tendered in its exchange offer.

The company also closed on its repurchase of all $25.2 million principal amount of its 11½% senior secured notes due 2005.

For the old convertibles, iBasis issued the same principal amount of new 6¾% convertible subordinated notes due 2009 that convert at $1.85 per share.

There is now $0.9 million of the old convertibles outstanding following the exchange.

iBasis repaid the 11½% notes with par in cash plus accrued interest and the issuance of warrants for 5.18 million shares exercisable at $1.85 per share.

iBasis issued $29 million of new 8% secured three-year convertible notes which convert at $1.85 per share. It used $25.2 million of the proceeds to finance the prepayment of the 11½% notes. The placement was increased from the originally planned $25.2 million.

"I'm very pleased with this debt refinancing, which culminates a three-year effort to strengthen our balance sheet," said Ofer Gneezy, iBasis' president and chief executive officer, in a news release. "Our undivided attention is now on growing our international calling card and carrier business."

At it was previous announcement on June 14, iBasis said it extended its exchange offer of new 6¾% convertible subordinated notes due 2009 in exchange for its $38.2 million principal amount of 5¾% convertible subordinated notes due March 2005.

It set an expiration date of June 17 instead of midnight ET on June 14.

iBasis announced on May 14 it had begun its previously announced exchange offer.

The new convertibles are being offered on a one-for-one basis in exchange for the existing convertibles. They will have a higher coupon, a longer maturity and a "significantly reduced" conversion price. The existing notes convert at $86.14 per share while the new notes will convert at $1.85.

The new notes will have a non-callable period until June 15, 2005 and then a provisional call with a 150% hurdle. From June 15, 2007 they will have a hard call, initially at 102.

The exchange is subject to conditions including the tender of at least 90% of the existing convertibles.

The Burlington, Mass., telecommunications company also plans to refinance its $25.2 million 11½% senior secured notes due January 2005.

The transactions are intended to refinance the company's $67.9 million of debt coming due within the next two years. If iBasis is not successful it warned that it may not be able to meet its obligations.

Imperial Capital LLC is the dealer manager for the convertible exchange. D.F. King & Co. Inc. is the exchange agent.

iBasis also said in the registration statement that it plans to prepay the 11½% senior secured notes. It will also terminate various securities exchange agreements by paying $25.175 million in cash and issuing warrants for 5.176 million shares of common stock. The warrants will have an exercise price of $1.85 per share and will run for three years.

To fund the redemption, iBasis said it has a commitment of $25.2 million from a third party. In return it will issue new 8% three-year senior notes. However iBasis may also obtain the financing from other sources.

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