Stan Beer
Tuesday, 17 March 2009 04:03
Opinion and Analysis
Page 1 of 2
Primus
Telecommunications Group, the US holding company of Primus Telecom
Australia has filed for Chapter 11 protection to reduce interest rate
payments to creditors on debts totalling US$650 million (about AUD$1
billion). The consensual Chapter 11 filing with creditors will see the
debts reduced to US$315 million.
Primus Telecom Australia CEO Ravi Bhatia told
iTWire that the restructuring of the holding company's debt would
reduce the load on the profitable Australian subsidiary in contributing
to interest payments.
At one stage the debt to creditors was US$1.4 billion, which the
company paid down by half to US$650 million and this latest Chapter 11
filing would reduce the debt to US$315 million, said Mr Bhatia. The interest on the debts will be
cut from US$65 million to US$30 million a year, he added.
Mr Bhatia said the Australian company made a gross profit of $130 million last year and was "holding up well this year".
"We're highly profitable and we were supporting the interest rate obligations of the holding company," said Mr Bhatia.
"The interest obligations of the holding company have reduced by 50
percent so that means we have to send them less and more cash is
available for local investment."
Mr Bhatia said Primus Australia at one stage was sending one third of
the US$65 million a year debt interest to its US parent to support the debt. Now it
will be cut to one third of AUD$30 million a year in interest payments support, to about AUD$10 million.
"It was a hell of a lot," said Mr Bhatia.
"The business in Australia generated a gross profit of $130 million
Aussie and we're the only telco who is not sending jobs overseas, we don't outsource and we
won't be letting go of people here. This year is so far so good - we're
holding up pretty well."
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