New York, March 21 - Versatel Telecom International NV said it has reached agreement with an ad hoc bondholder committee on a revised exchange offer and consent solicitation for all its outstanding high yield and convertible notes.
Members of the committee hold 33% of the Amsterdam, Netherlands company's outstanding notes. The committee is part of a wider group of bondholders that own 74% of the outstanding notes.
The exchange is intended to eliminate all Versatel's outstanding debt. Bondholders will receive cash and shares for tendering their notes.
The consent solicitation being conducted as part of the exchange is to eliminate or modify almost all of the restrictive covenants and other provisions of the notes.
The exchange is conditional on at least 99% of the outstanding notes being tendered.
If 99% of the bonds are tendered, Versatel will pay out €308 million in the exchange. Versatel will also pay accrued interest through March 31. Bondholders will also receive 80% of the equity of the company, excluding the impact of warrants that will be issued to existing shareholders.
Versatel will also pay holders of its high-yield bonds who tender in the first seven days of the exchange and do not withdraw and convertible bondholders who tender an additional cash payment of $25 or €25 per $1,000 or €1,000 principal amount. If 99% of bondholders meet the condition, Versatel will pay out a further €42 million.
Details of the amounts being offered are shown in table 1.
At the same time the exchange offer is completed, Versatel will issue warrants to its current shareholders entitling them to 1 share for every 4.80 shares held. The strike price of the warrants will be €1.50, exercisable at any time within two years.
The warrants will represent 4% of the shares that will be outstanding immediately following completion of the exchange offer.
Versatel said that it will also be asking noteholders to support court procedures in case it does not reach the 99% threshold. If 75% of noteholders back the plan but the company does not achieve 99% support, Versatel will file for a plan of composition for a suspension of payments (surseance van betaling) with a Dutch court and possibly a Chapter 11 reorganization in the U.S.
Versatel said that on completion of the exchange it will have enough cash along with anticipated cash flow from operations to fund operations to at least the beginning of the second quarter of 2003. Additional funding needs beyond that will be less than €50 million.
Dealer managers for the exchange offer and consent solicitation and advisors to Versatel are Lehman Brothers and Morgan Stanley.
A previous exchange offer announced at the end of last year was abandoned after Versatel failed to achieve sufficient support from bondholders. It offered 60% of the company's equity and roughly similar amounts of cash, although it did not have the additional consent payment.
Table 1: Versatel exchange details
| High Yield Bonds | Cash | Consent | No. of shares
|
| $225 million 13¼% senior US dollar notes due 2008 | $220.00 | $25.00 | 233.77
|
| $150 million 13¼% senior US dollar notes due 2008 | $220.00 | $25.00 | 233.77
|
| $180 million 11½% senior US dollar notes due 2009 | $202.50 | $25.00 | 233.77
|
| €120 million 11½% senior euro notes due 2009 | €202.50 | €25.00 | 203.45
|
| €300 million 11¼% senior euro notes due 2010 | €197.50 | €25.00 | 203.45
|
|
|
| Convertible Notes
|
| €300 million 4% senior convertible notes due 2004 | €147.50 | €25.00 | 234.37
|
| €360 million 4% senior convertible notes due 2005 | €147.50 | €25.00 | 234.37
|
|
|
| All amounts are per $1,000 or €1,000 principal amount
|
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