ICO North America secures revolver, convertibles forbearances; both require restructuring plan

By Caroline Salls

Pittsburgh, May 4 - ICO Global Communications (Holdings) Ltd. subsidiary ICO North America, Inc. has entered into a second forbearance agreement under which the lenders on its amended and restated revolving credit agreement have agreed not to act on a payment default through May 15, according to an 8-K filed with the Securities and Exchange Commission.

The subsidiary has also secured a payment default forbearance agreement from the holder of its 7.5% convertible notes due Aug. 15, 2009.

Under the subsidiary's first revolver forbearance agreement, the forbearance period was scheduled to terminate on May 1.

However, ICO North America told the lenders that it would not repay the revolver in full on May 1, which triggered an event of default.

According to the 8-K, the second forbearance period can be extended to June 5 if a forbearance extension date has occurred. The forbearance extension date is the earlier of the date on which ICO North America enters into a margin loan agreement secured by auction-rate securities held by the subsidiary or the date on which ICO North America obtains a commitment letter for replacement financing.

Forbearance consideration

In exchange for the second forbearance, ICO North America will pay a fee equal to 1.25% of the existing principal under the credit agreement, and the interest rate has been increased to 16%.

ICO North America and the subsidiary guarantors have agreed to use all of the proceeds received from any sale of auction-rate securities or any net cash proceeds from any asset sale, debt issuance or ICO North America equity issuance to repay the revolver obligations.

In addition, ICO North America must meet a number of forbearance agreement closing conditions, including securing a senior notes forbearance executed by the required percentage of the holders of ICO North America's convertible senior secured notes.

Restructuring condition

ICO said the subsidiary has agreed to try to obtain an ARS margin facility and a credit agreement replacement facility, as well as to present a restructuring plan for its business and a plan to repay the loans.

The plan could include an equity investment from an affiliate or third party, a refinancing or a sale of assets, according to the filing.

Additionally, ICO North America has agreed to cooperate with the lenders and agents in taking any actions with the Federal Communications Commission necessary for the assignment of ICO North America's FCC license and other assets.

Convertibles default

According to the 8-K, the failure to repay the credit agreement loans on May 1 resulted in an event of default on ICO North America's roughly $736 million outstanding principal amount of 7.5% convertible notes due on Aug. 15, 2009.

However, the noteholders have agreed not to act on the default until the earlier of May 15 or June 5 if ICO North America has entered into an ARS margin facility or a binding commitment for a credit agreement replacement facility.

Closing of the senior notes forbearance is subject to payment of the legal fees of the noteholders' counsel.

The ICO subsidiary has also agreed not to sell any auction-rate security without the consent of the noteholders unless the sale would result in gross proceeds of at least the par or stated value of the auction-rate securities.

ICO North America and the subsidiary guarantors have also agreed not to challenge or seek to invalidate any of the outstanding revolver or senior notes obligations in connection with any insolvency proceeding or to subordinate or re-characterize any claim of the collateral agent or any lender or the notes trustee or noteholders.

Also, ICO North America has agreed to seek a restructuring of the senior notes or other restructuring of the subsidiary by June 5.

ICO is a Reston, Va., mobile satellite services company.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.