OKLAHOMA CITY-Dobson Communications Corp. and its American Cellular Corp. joint venture with AT&T Wireless Services Inc. reported plans to restructure American Cellular’s $1.6 billion debt level, including full repayment of the venture’s bank credit facility.
Dobson said the restructuring will be effected through either a voluntary exchange of $700 million worth of 9.5-percent senior subordinated notes or through a prepackaged bankruptcy plan for American Cellular of at least 99.5 percent of outstanding notes not tendered. Dobson added that the bankruptcy plan would apply only to American Cellular and its subsidiaries and would not involve Dobson.
If all the notes are exchanged, Dobson said note holders would receive an aggregate recovery consisting of $50 million in cash, more than 45 million shares of Dobson Class A common stock and 700,000 shares of a new series of Dobson convertible preferred stock worth $125 million.
Dobson also said the restructuring would include the capitalization of a recently formed, wholly owned indirect subsidiary with $50 million, which would then seek to raise approximately $900 million through new senior notes. The subsidiary would then merge with American Cellular, which would then use the net proceeds from the issue of new senior notes to repay American Cellular’s existing bank credit facility. American Cellular would become a wholly owned consolidated subsidiary of Dobson.
American Cellular has been in violation of its total debt leverage ratio covenant in its bank credit facility since June 30, 2002, and as of March 31, 2003, owed approximately $879.6 million to its credit facility.
