Broadview Files for Bankruptcy, Faces Restructured Future

Broadview Networks late Wednesday revealed filing for Chapter 11 bankruptcy “in order to effectuate its ‘pre-packaged’ financial restructuring plan.'”

An “overwhelming majority of Broadview stakeholders” have accepted the restructuring plan, said the telecommunications company, which filed its petitions for reorganization in the U.S. Bankruptcy Court for the Southern District of New York.

The company noted it anticipates completing the financial restructuring in the fourth quarter of 2012.

“Broadview Networks will maintain normal day-to-day business operations throughout the restructuring process, and we expect no disruptions to our relations with our customers, employees, vendors or sales agents,” the company said in a statement.

Broadview, based in Rye Brooke, N.Y., said the reorganization will cut half its debt from $300 million to $150 million under its existing senior secured notes, lowering its annual interest expense by roughly $17 million annually. In a Securities and Exchange Commission filing, the company notes that $300 million (principal excluding interest) in senior secured notes mature this year. The company also has an outstanding balance of $13.9 million on a $25 million credit agreement, according to the filing.

In a bankruptcy filing, Broadview lists $258.3 million in assets at the end of the first quarter and $373.4 million in liabilities, according to Reuters.

Earlier this summer, the company warned that bankruptcy was a possibility if all its investors didn’t all agree to a restructuring plan.

Then, Broadview rejected a proposal from a limited partnership affiliated with billionaire Carl Icahn to purchase 70 percent of the company for $165 million in cash equity and $10 million in loans.

Broadband asserted the proposal valued the company lower than the value implied by its reorganization plan.

High River Limited Partners, which holds about $51 million of Broadview’s senior secured notes, claims the telecommunication provider’s valuation is inflated and based on projected financial results that Broadview cannot meet.

Broadview has retained Willkie Farr & Gallagher LLP as its restructuring counsel and Evercore Group, L.L.C. as its financial advisor. Dechert LLP is serving as restructuring counsel for the ad hoc group of noteholders while the group of investors has retained FTI Consulting as a financial advisor.

A spokesperson for Dechert LLP declined to comment on the noteholders’ position in connection with the proposed restructuring plan.

Rachel Strickland, an attorney with Willkie Farr & Gallagher, said the required thresholds of receiving approval of the restructuring plan from at least one half of the noteholders representing at least two thirds of the debt have been satisfied.

“No other vote is required,” she said in an email when asked if Broadview needs other approvals from investors in order to reorganize.



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