Hawaiian Telcom Communications Inc., the largest telephone company on the Hawaiian islands, said Monday that it has filed for Ch. 11 bankruptcy protection.
The company had been working with creditors since October on a debt-restructuring agreement and said it decided the bankruptcy-protection filing was the best course of action. It blamed the filing partly on increased competition, economic volatility and its failure to meet capital expenditure needs.
Hawaiian Telcom posted a loss of $34 million in the third quarter, its third straight quarterly loss this year. Last month the company filed documents with the federal Securities Exchange Commission stating that it may seek court protection if talks with creditors failed.
Hawaiian Telcom postponed a $26 million interest payment in November and was in the midst of a 30-day grace period, which ended Monday. Hawaiian Telecom is carrying more than $1 billion in debt, the result of financing that was arranged three years ago for the company's $1.6 billion sale to Carlyle Group, a private-equity firm based in Washington, D.C.
Hawaiian Telcom said it is seeking approval from the U.S. Bankruptcy Court for the District of Delaware to use cash on hand to finance its operations.
"Our decision to restructure through a Chapter 11 filing allows the company to reduce its level of debt and reorganize its business, so we can emerge a stronger and more financially secure company better able to compete in the ever-changing communications industry," President and Chief Executive Eric Yeaman said in a statement.
The company said it has adequate liquidity to support near-term operating expenses. It had about $75 million in available cash as of Sunday, which will be used to pay workers' salaries, customer programs, vendors and suppliers and finance overall operations.
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