US parent's move into chapter 11 is good news for us, says Primus Australia

Stuart Corner
Tuesday, 17 March 2009 03:14

IT Industry - Market

The move into chapter 11 was take the OTCB listed Primus Telecommunications Group and its three affiliated holding companies, Primus Telecommunications Holding, Primus Telecommunications International and Primus Telecommunications IHC into chapter 11.

Primus said that these four entities had, collectively "reached agreement with various noteholders on the terms of a consensual financial restructuring that, if consummated, would materially improve the holding companies' liquidity by reducing principal debt obligations by approximately $US315m, or over 50 percent, reduce interest payments by over 50 percent and extend certain debt maturities."

Primus has also secured waivers from some senior secured lenders and the debt of the remaining senior secured lenders is to be reinstated under the proposed plan. It is still in discussions with the remaining senior secured lenders to try and resolve their claims. It expects to complete its re-organisation within four months.

Under the plan existing shareholders in the parent company will lose all their equity but will hold up to 15 percent of the equity in the restructured company if it reaches a predetermined value. The company says all suppliers wil be paid in full in the normal course of business.

Primus also reported its Q4 results: net revenue was $US203m, down $US28m from Q3 2008 and down $US18m from the year-ago quarter. It attributed the fourth quarter decline to the $US35m negative impact from the strengthening of the US dollar against the currencies of its major foreign operations. This was offset by retail revenue growth of $US4m and wholesale services revenue growth of $US3m in the fourth quarter. Adjusted EBITDA was $US15m as compared to $US12m in the prior quarter and $US17m in the year-ago quarter. Adjusted EBITDA for the full year 2008 was $US66m. Cash balance at December 31 2008 was $US37m.