Versatel offers cash, stock for all outstanding debt

By Peter Heap

New York, Oct. 10 - Versatel Telecom International NV announced Wednesday an exchange offer to retire all its outstanding debt.

Holders of the Amsterdam, Netherlands-based broadband company's notes and convertibles will be offered a combination of cash and stock for the securities.

In total the offer is for $555 million and €420 million of notes and €660 million of convertibles.

If 90% is tendered, the shares to be offered will represent 60% of the equity outstanding.

The exchange offer is conditional on at least 90% of the initial principal amount of its notes in total and at least 90% of the outstanding principal of each individual series being tendered.

Simultaneous with the exchange offer, Versatel is conducting a consent solicitation to eliminate or modify "substantially all" of the restrictive covenants and other provisions of the notes.

Versatel said it will file an F-4 registration statement for the offer with the Securities and Exchange Commission later this week.

The offer is as follows:

Payment per $1,000

or €1,000 principal

Security Principal Cash Shares

High Yield Notes

13¼% senior notes due 2008 $225 million $215 116.321

13¼% senior notes due 2008 $150 million $215 116.321

11 7/8% senior notes due 2009 $180 million $205 115.805

11 7/8% senior notes due 2009 €120 million €205 105.533

11¼% senior notes due 2010 €300 million €205 105.533

Convertible Notes

4% senior convertible notes due 2004 €300 million €150 70.982

4% senior convertible notes due 2005 €360 million €150 70.982

Versatel said in its announcement that it believes the exchange offer and consent solicitation "are in the best interests of the company and the holders of all its securities, including shareholders."

Noting that the offer was being done voluntarily, Versatel said that on completion its cash balances and anticipated cash flow from operations will provide the company with funding for 30 to 36 months. It added that it expects capital spending in 2002 to be "significantly below" 2001 levels.

The exchange is also subject to shareholders approving an increase in the company's share capital.

The dealer managers for the exchange offer and consent solicitation and advisors on the restructuring are Lehman Brothers and Morgan Stanley.

End

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