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IWO Holdings files pre-packaged Chapter 11; noteholders to recover 47 cents on the dollar
By Jeff Pines
Washington, Jan. 4 - IWO Holdings filed a pre-packaged Chapter 11 with the U.S. Bankruptcy Court for the District of Delaware Tuesday that calls for its senior noteholders to recover an estimated 47 cents on the dollar by getting all of the reorganized company's new common stock, subject to dilution.
As part of the reorganization, a new company called IWO Escrow Co. will sell $150 million of seven-year senior secured floating-rate notes and $75 million of 10-year senior discount notes. The interest rate for the floating-rate notes will be based on Libor.
The note proceeds will be used to repay IWO's pre-Chapter 11 secured lenders. Once IWO's reorganization plan is consummated, IWO Escrow will be merged into IWO Holdings and the notes will become the responsibility of IWO Holdings.
IWO can redeem the floating-rate notes after two years and can redeem the discount notes after five years.
AIG Global Investment Corp., Ares Leveraged Investment Fund II LP and Eaton Vance Management have agreed to buy up to $60 million of the discount notes if there are no other buyers.
The old common stock will be cancelled.
The Lake Charles, La.-based affiliate of Sprint PCS listed its total assets as $246.92 million and its total liabilities as $413.28 million.
U.S. Bank NA is the largest unsecured creditor as trustee for $160 million of 14% senior notes due 2011. AIG Global Investment Group is the second-largest unsecured creditor with an $81.69 million claim for its IWO notes. It is followed by the Bank of New York with a claim for $64.32 million of notes.
IWO's Chapter 11 case number is 05-10009.
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