Author's Opinion

The views in this column are those of the author and do not necessarily reflect the views of iTWire.

Have your say and comment below.

Tuesday, 17 March 2009 04:03

Primus US parent files for Chapter 11 with debts of AUD$1 billion

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."


Mr Bhatia said it was important to differentiate between the different types of Chapter 11 bankruptcy filings.

"There is voluntary, consensual and forced. This is consensual between Primus and its bond holders," Mr Bhatia said.

“This is good news for Primus Australia because it results in increasing Primus Australia’s ability to re-invest in our local operations,” said Mr Bhatia.  “Since it was granted a license to operate in 1997, Primus has invested over $500 million in its network facilities in Australia.

“Primus Australia is a solidly profitable business that generates significant positive cash flow, making us financially independent and self sufficient,” Mr. Bhatia said. “No employees, customers, suppliers or business partners in Australia will be affected in any way by the financial restructuring activities of the U.S. holding company and there will be no loss jobs in Australia.

“We expect only to benefit from the restructuring since a large portion of local profits that were used in part to service the U.S. holding company’s debt may now be available for investment in organic expansion as well as acquisitions of synergistic telecom businesses throughout Australia.  It is a ‘win-win’ situation for the U.S. holding company and its bondholders, as well as Primus Australia and its customers, vendors and business partners in Australia.”    

Primus Australia’s network offers nationwide coverage through its own backbone network with facilities in 66 POIs and 282 DSLAMs across Australia, as well as nationwide long-distance telephone and high speed broadband services.  In addition, Primus operates its own fibre network in the five major capital cities, delivering a range services to residential and business customers including direct-connect services, ISDN, telephone, broadband, Ethernet and hosting services.

Subscribe to ITWIRE UPDATE Newsletter here


The much awaited iTWire Shop is now open to our readers.

Visit the iTWire Shop, a leading destination for stylish accessories, gear & gadgets, lifestyle products and everyday portable office essentials, drones, zoom lenses for smartphones, software and online training.

PLUS Big Brands include: Apple, Lenovo, LG, Samsung, Sennheiser and many more.

Products available for any country.

We hope you enjoy and find value in the much anticipated iTWire Shop.



iTWire TV offers a unique value to the Tech Sector by providing a range of video interviews, news, views and reviews, and also provides the opportunity for vendors to promote your company and your marketing messages.

We work with you to develop the message and conduct the interview or product review in a safe and collaborative way. Unlike other Tech YouTube channels, we create a story around your message and post that on the homepage of ITWire, linking to your message.

In addition, your interview post message can be displayed in up to 7 different post displays on our the site to drive traffic and readers to your video content and downloads. This can be a significant Lead Generation opportunity for your business.

We also provide 3 videos in one recording/sitting if you require so that you have a series of videos to promote to your customers. Your sales team can add your emails to sales collateral and to the footer of their sales and marketing emails.

See the latest in Tech News, Views, Interviews, Reviews, Product Promos and Events. Plus funny videos from our readers and customers.


Stan Beer

Web Analytics Made Easy -

Stan Beer co-founded iTWire in 2005. With 35 plus years of experience working in IT and Australian technology media, Beer has published articles in most of the IT publications that have mattered, including the AFR, The Australian, SMH, The Age, as well as a multitude of trade publications.

Share News tips for the iTWire Journalists? Your tip will be anonymous




Guest Opinion

Guest Interviews

Guest Reviews

Guest Research

Guest Research & Case Studies

Channel News