Microcell files details of debt restructuring plan, fixes March 17 for vote

By Carlise Newman

Chicago, Feb. 20 - Microcell Telecommunications Inc. released details of its previously announced restructuring plan and fixed March 17 as the deadline for creditors to vote.

The Montreal telecommunications company already has signed commitments to vote in favor of the plan from holders of C$443 million or 75% of its secured debt and C$833 million or 55% of its unsecured debt.

Microcell's reorganization plan, disclosed in a filing with the Securities and Exchange Commission, is intended to significantly reduce its debt, cutting obligations by C$1.7 billion and annual interest payments be between C$160 million and C$200 million.

Assuming the plan wins support, the Superior Court of the Province of Quebec will be asked to sanction the plan on March 18. Microcell filed for bankruptcy under the Canadian Companies' Creditors Arrangement Act on Jan. 3.

Under the plan, Microcell's existing C$600 million of secured debt will be exchanged for C$350 million of new secured debt and for first and second preferred shares convertible into 68% of the company's equity, before exercise of warrants and management options.

Specifically, secured creditors will receive C$300 million tranche B Debt, C$176 million of first preferred shares and C$74.417 million of second preferred shares. As an alternative to the preferreds, secured creditors may also choose to receive up to C$50 million of tranche C debt.

Unsecured creditors will receive $43.293 million of shares, C$74.417 million of second preferred shares and one-third of the aggregate number of each of the warrants. After conversions but before exercise of warrants and management options, this group will receive 31.9% of the equity. Creditors in this class are holders of Microcell's 14% senior discount notes due June 1, 2006, 11 1/8% senior discount notes due Oct. 15, 2007 and 12% senior discount notes due June 1, 2009.

Holders of current shareholdings immediately prior to the effective date will receive shares for 0.1% of the equity of New Microcell at the rate of one new share per 10,000 existing shares and two-thirds of the warrants.

The tranche B debt is a term loan to new Microcell's Amalco subsidiary in two parts, a C$100 million piece and a C$200 million equivalent U.S. dollar portion. Interest will be 50 basis points over the rate on the tranche A exit facility. Maturity is Dec. 31, 2008. Security is a second lien on all assets of New Microcell, Amalco and their subsidiaries.

The tranche C notes will be issued by Amalco, total $50 million and have a 10-year maturity. Interest will be 8.0% paid in cash or accruing and compounding until maturity at Amalco's choice. The notes will be guaranteed by new Microcell and its subsidiaries other than Amalco and will be secured by a third lien on all assets of new Microcell, Amalco and their subsidiaries.

The new stock will be either class A restricted voting shares or class B non-voting shares.

The preferreds will be issued as units if an anticipated tax ruling not received in time.

These terms assume that the effective date occurs on April 30, and that the issue price of the new instruments - the preferreds or units - is $15 per instrument. An earlier effective date would lead to slightly different amounts.

Microcell will also have a tranche A exit facility, a revolver to be taken out by Amalco of between C$25 million and C$75 million. Terms are to be negotiated with lenders. It will be guaranteed by New Microcell and its subsidiaries other than Amalco. It will be secured by a first lien on all assets of New Microcell, Amalco and their subsidiaries.

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