New York, Feb. 9 - Viatel said it has signed a term sheet to raise up to $60 million through the issuance of a senior secured convertible bond to four investors.
Under the non-binding term sheet, the convertible will pay 8% interest and mature in 2014, according to a 6-K filing with the Securities and Exchange Commission.
The investors are Morgan Stanley & Co. Inc., Ahab Capital Management Inc., CFSC Wayland Advisers Inc. and Varde Partners Inc.
The initial size is $50 million, but the deal may be increased to $60 million. Of the total, Morgan Stanley will take $33.65 million, Ahab Capital $3.35 million, CFSC Wayland $3 million and Varde Partners $10 million.
Viatel said that once it closes on the deal its business plan will be fully funded.
Viatel, an Egham, Surrey, U.K.-based telecommunications company, said it is reengineering itself to serve mid-sized businesses in Europe.
The notes will be issued under Rule 144A with registration rights.
Terms of the proposed convertible are:
| Issuer: | Viatel Holding (Bermuda) Ltd.
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| Issue: | Convertible senior secured notes
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| Amount: | $50 million, with possible upsizing to $60 million
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| Maturity: | 10 years
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| Coupon: | 8%, in cash or kind at Viatel's option
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| Conversion period: | After nine years or on occurrence of liquidity event (change of majority owner, liquidation, reorganization, IPO, default)
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| Conversion price: | $0.75 on occurrence of liquidity event
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| Otherwise, average of $0.75 for company equity value of $100 million rising in steps to an average of $3.75 for company equity value of $800 million
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| Call: | After nine years
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