RCN eyes exit by Dec. 31
Daily Deal/The Deal
December 9, 2004 Thursday
A Manhattan judge confirmed RCN Corp.'s reorganization plan Wednesday, Dec. 8, and the bankrupt cable company said it expects to emerge from Chapter 11 protection by Dec. 31.
According to the plan approved by Judge Robert D. Drain of the U.S. Bankruptcy Court for the Southern District of New York in Manhattan, RCN will reduce its debt to about $500 million.
The cabler will get debt down to that figure after swapping new equity for about $1.19 billion in debt.
RCN, which filed a prepackaged bankruptcy plan on May 27, offers bundled services of cable TV and telecommunications.
In addition, RCN expects to have in place new credit facilities by year end, led by Deutsche Bank, of up to $480 million. The financing will be used to pay off senior secured lenders led by J.P. Morgan Chase & Co.
Beyond those credit facilities, RCN said it would have more than $100 million in cash upon emergence.
Furthermore, RCN acquired Pepco's 50 percent stake in the Starpower joint venture between the two, enabling RCN to take full ownership of the entire Washington, D.C. market by year-end.
"Many telecom companies have emerged after a drawn-out restructuring process with too much debt and a tired business plan," David C. McCourt, RCN's chairman and CEO, said in a statement. "RCN has received confirmation after only 28 weeks with the right balance sheet and a fresh strategy for selling bundled services that we pioneered a decade ago and that has become the industry standard."
RCN's expected emergence has also led to some management changes. McCourt, who founded RCN in 1997, also said Wednesday that he is recommending Peter D. Aquino, a 20-year telecom veteran, as the company's next CEO.
Aquino has been the senior managing director of Capital & Technology Advisors LLC, a telecommunications advisory firm, since 2001.
RCN formed a search committee to replace McCourt in July. He will remain as chairman and as a special consultant to the company, advising RCN on strategic initiatives.
McCourt has asked the creditor's committee to appoint his successor by no later than Dec. 31.
The company has also appointed a new board of directors. The new directors have indicated their intent to confirm Aquino as CEO, RCN said.