XO Holdings plans up to $200 million rights offering of preferreds

By Marisa Wong

Madison, Wis., Oct. 12 - XO Holdings, Inc. announced it plans to offer to holders of its common stock rights to purchase up to $200 million of shares of a new class of non-convertible class D preferred stock.

XO would distribute at no charge to each stockholder transferable subscription rights that would enable stockholders to purchase one preferred for each share of common stock held by such stockholder on a record date yet to be set and at a subscription price to be determined.

If any rights expire unexercised, the remaining shares of class D preferreds will be allocated on a pro rata basis to those who exercised rights and indicated their desire to oversubscribe for any remaining preferreds.

The class D preferreds will rank senior to XO's common stock and pari passu with its 7% class B convertible preferreds and its 9.5% class C perpetual preferreds.

Holders of the class D preferreds will not be entitled to voting rights.

The class D preferreds will accrue a payable-in-kind quarterly dividend at a rate to be determined and have a maturity date also to be determined.

The proceeds would be used to continue to implement XO's transformation plan, which may include the acquisition of capital assets in support of its operations, to take advantage of opportunities that may arise to enhance its competitive position, for general corporate purposes and to repay any outstanding debt.

The rights offering is expected to be completed in the early part of 2011.

XO Holdings is a Herndon, Va., voice and internet services company.

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