LAKE CHARLES, La.-US Unwired Inc. reported in a Securities and Exchange Commission filing that its wholly owned subsidiary, IWO Holdings Inc., which is currently not in compliance with its restrictive covenants under its senior bank credit facility, will not make a scheduled June 4 interest payment on its $240 million credit facility.
The filing notes IWO has been unable to develop a business plan for this year that provides sufficient liquidity and is in discussions with its banking group regarding the restructuring of its debt. IWO said it might consider voluntarily seeking bankruptcy protection as a way to further preserve its cash position.
US Unwired said IWO’s lenders have been advised of the non-payment and that certain of the lenders have orally concurred in the decision to not make the payment while restructuring discussions with them are taking place.
If IWO files for bankruptcy protection, US Unwired said it is highly likely that IWO would not remain a subsidiary. In addition, US Unwired said the $2 million it would save annually from the termination of its management arrangement it has with IWO would not make up for the $10 million it receives in management fees per year from IWO resulting in an $8 million reduction in annual cash flow for US Unwired.
US Unwired added it is not responsible for IWO’s debt and a default by IWO under its senior bank credit facility would not result in a default under US Unwired’s lending arrangements.
