RIDGEFIELD PARK, N.J.-To conserve cash for operations, MobileMedia Corp. did not make its interest payment last month by the 30-day grace period on 9.38 percent senior subordinated notes due November 2007. Subsequently, Moody’s Investor Service Inc. lowered ratings on MobileMedia’s senior subordinated ratings to C from Caa.
MobileMedia previously announced it failed to meet its Nov. 1 interest payment on the 9.38 percent notes. The grace period ended Nov. 30. The company is involved in discussions with bank lenders regarding events of default under its credit agreement arising from covenant violations and the missed interest payments.
In addition to the 9.38 percent notes, MobileMedia’s $750 million three tranche senior secured bank facility was downgraded by Moody’s to Caa from B3, “given the possibility that the company may fail to make its Dec. 9th interest payment on the bank facility,” said Moody’s. MobileMedia’s $210 million 10.5 percent senior subordinated deferred coupon notes due December 2003 also are affected by the rating action, said the New York ratings firm.
A restructuring committee has been established by MobileMedia’s board of directors to design a business plan for solving operational problems, said MobileMedia. The committee includes Mitchell R. Cohen, acting Chief Executive Officer David A. Bayer and Clifford A. Bean, previously of Arthur D. Little Inc.
In addition, the company has retained Donaldson, Lufkin & Jenrette Securities Corp. as financial adviser and Sidley & Austin as restructuring counsel. Other advisers include Ernst & Young and Latham & Watkins.
