Copyright 2002

The Deal L.L.C. The Daily Deal…05/21/2002

From LexisNexis

ICG Communications Inc., the Englewood, Colo.-based broadband provider, received bankruptcy court approval late Monday, for a reorganization plan that will allow it to emerge from Chapter 11 as a publicly listed company in 18 months.

The company filed for Chapter 11 in Nov. 2000 after a high-yield debt financed expansion earned positive Ebitda of $40 million in 2001.

As part of the reorganization, holders of $2.5 billion in unsecured debts, mostly high-yield bonds, will get 8 million new common shares in the newly reorganized company. Additionally, other debt holders, including ICG's senior bank lenders, will get $214 million in new debt.

First Union and Royal Bank of Canada, ICG's senior lenders before the bankruptcy filing, have agreed to participate in the reorganization by taking on $60 million in new loans. They had $85 million in loans outstanding when ICG filed for bankruptcy.

Liberty Media Group and Dallas-based LBO firm Hicks, Muse, Tate & Furst, who had invested in $750 million in preferred shares, will, like other shareholders, see their investment wiped out.

Once it emerges from bankruptcy, ICG will continue to provide largely the same services as before, said CEO Randall E. Curran.

"We are going to be a dial-up Internet access provider for national and regional ISPs. And we are going to provide voice and data services to medium and large businesses," he said.

The company has $100 million in cash to help it get through life after bankruptcy and a $65 million exit financing lined up from Cerberes Capital.

The biggest risk to the future of ICG will be any potential change in the regulatory landscape veering away from continuing to enforce cooperation between incumbent telecommunications carriers and CLECS.

"We have both the cash resources to spend and a profitable base to work from… The biggest risk to the future is the regulatory environment. If the regulators move away from making the incumbents cooperate with the CLECS on a competitive basis, that would be a problem," said Curran.

ICG's reorganization plan will become effective between May 30 and June 10, said Curran.

Dresdner Kleinwort Wasserstein, which advised ICG on its restructuring, valued the company between $350 million to $500 million, according to court documents. As a result, the company's 8 million new common shares are valued between $142 million and $292 million.

In 2001 the company's revenues totaled $499.6 million.