Alamosa PCS extends exchange offers for three series of notes

New York, Oct. 8 - Alamosa Holdings, Inc. (Caa3) and its wholly owned subsidiary Alamosa (Delaware), Inc. said that they had extended the expiration date of their previously announced exchange offers for the company's debt at the request of certain noteholders.

Alamosa said that the offers were extended to 5 p.m. ET on Oct. 15, subject to possible further extension.

As of the close of business on Oct. 7, $70.3 million principal amount of Alamosa's 12½% senior notes due 2011 (28% of the outstanding amount), $21.3 million principal amount of its 13 5/8% senior notes due 2011 (14% of the outstanding amount) and $18.2 million principal amount of its 12% senior discount notes due 2010 (5% of the outstanding amount) had been validly tendered and not withdrawn.

As previously announced, Alamosa, a Lubbock, Tex.-based Sprint PCS affiliate serving customers in the Southwest, Western and Midwestern U.S. said on Sept. 12 that it had begun an offer to exchange new debt plus convertible preferred stock and contingent value rights based on its common stock's performance for its outstanding public debt.

Alamosa said that the exchange offer was being undertaken as "the final step in a financial restructuring intended to de-leverage the company and stabilize its key business relationships."

It said that the exchange offer had the support of an ad hoc committee of public bondholders whose members hold approximately 45% in principal amount of Alamosa's outstanding public debt.

Alamosa proposed that the holders of the outstanding $400 million aggregate principal amount of its 12½% senior notes due 2011 and 13 5/8% senior notes due 2011 exchange their bonds for a total of $260 million in Alamosa (Delaware), Inc.'s new 11% senior notes due 2010 and 400,000 units (each consisting of one share of the company's series B convertible preferred stock plus 73.61 contingent value rights tied to the performance of Alamosa's common stock during the six months after consummation of the exchange). The noteholders would also receive accrued and unpaid interest as of the date of the exchange.

The company further proposed that the holders of the outstanding $298 million accreted amount of its zero-coupon senior discount notes due 2010 would receive a total of approximately $194 million in Alamosa (Delaware), Inc.'s new 12% senior discount notes due 2009, plus 298,000 of the convertible preferred stock plus contingent value rights units.

The preferred stock will have an initial liquidation preference of $250 per share, with quarterly interest accruing at 6% for the first five years from issuance. After that the preferreds will pay cash dividends at 4.5% of the accreted value to maturity on July 31, 2013.

Based on an initial conversion price of $3.40, the preferred stock will be convertible into 51.4 million shares of Alamosa's common stock, representing approximately 35% of the equity on a fully converted, fully diluted basis.

The CVRs entitle the holders to receive additional cash payments, debt or common stock depending on the performance of Alamosa's common stock for the period ending six months from the close of the restructuring transactions. Cash payments will be subject to some restrictions under the credit facility.

Under the CVRs, Alamosa will pay the amount by which $3.40 exceeds the greater of either the weighted average price of Alamosa stock during the six months following completion of the exchange or $2.82. Alamosa may make the payment in cash - but only if there are no borrowings on its credit facility - in stock using shares valued at $2.82 or in new notes. If the stock trades above the $3.40 target price for 20 out of 30 trading days the rights are extinguished.

Alamosa said that the exchange offer requires holders of 97% of the face amount of its existing notes to tender their securities. If less than 97% of the bondholders agree to tender their existing notes, Alamosa would have the option of completing the restructuring through a prepackaged plan of reorganization.

The company said the prepackaged plan would provide the same consideration to bondholders and embody the same amendments to the Sprint agreements and senior credit facility. It could be effectuated with support of only two-thirds in principal amount and more than 50% in number of the bondholders. The prepackaged plan of reorganization would not affect any other creditors of Alamosa.

The company said that two key components of the restructuring which the debt exchange offer is a part of - the renegotiation of the Sprint agreements under which Alamosa operates and the renegotiation of certain terms of Alamosa's senior secured credit facility - have already been accomplished, subject to the consummation of the exchange offer. The renegotiated Sprint agreements will provide long-term pricing predictability for service bureau fees and stability to the rates charged for inter-service area fees, while the renegotiated credit facility terms, which have already been unanimously approved by the senior secured lenders, will provide additional flexibility by easing certain debt covenants.

It further said that the restructuring plan would provide for over $240 million of principal debt reduction and over $260 million in cumulative cash interest expense savings and expected economic benefits resulting from modifications to the Sprint agreements. Collectively, the restructuring and the amendments to the Sprint agreements "will allow management to focus on maximizing its business plan and capitalizing on growth opportunities while preserving Alamosa's flexibility to pursue attractive business acquisitions and combinations," Alamosa said in its news release.

On Sept. 22, Alamosa held a conference call with investors to talk about its exchange offers, and although a number of noteholders expressed unhappiness with the arrangement, Alamosa reiterated that it is confident it will go forward and that the company would be able to avoid filing for Chapter 11 bankruptcy protection, which Almosa said would occur if it does not receive approval from 97% of the noteholders.

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