Metromedia Amends Proposal; Was In Talks With Nortel
By CHRISTINE NUZUM
Of DOW JONES NEWSWIRES
NEW YORK -- Metromedia Fiber Network Inc. (MFNX) said Tuesday the expiration date for bondholders to consent to waiving its defaults and amending indentures was extended by one day until Aug. 31, and that other changes to the proposal were added.
Metromedia Fiber will begin hosting quarterly conference calls for investors as part of an amendment to the consent solicitation statement for bondholders, which was released Aug. 22. Until now, Metromedia Fiber Network hasn't held quarterly conference calls, frustrating some investors looking for information on business developments.
The company also extended the range of assets that may be used to secure vendor financing agreements. Under the amended terms, Metromedia Fiber can secure vendor financing with assets that are built, engineered, leased or improved with the proceeds of that financing, rather than only with the assets acquired under the financing.
Metromedia also said it agreed not to waive the execution and delivery of a pending $150 million credit facility led by Salomon Smith Barney as a condition to the consent solicitation.
On Aug. 22, Metromedia solicited bondholders to waive the defaults on its 10% senior notes, disclosed in its second-quarter report, and to revise indentures restricting its ability to raise vendor financing. Metromedia Fiber will pay consenting bondholders a fee equal to $1.25 for every $1,000 they hold in principal amount.
According to the consent solicitation statement of Aug. 22, Nortel Networks Inc. (NT) is in discussions with Metromedia to provide at least $200 million in vendor financing. At the time, the financing was expected to be unsecured. A spokesman for Nortel Networks declined to comment.
The receipt of $200 million in vendor financing agreements is one of many stipulations for a critical financing package, which expires on Sept. 4. To receive the $150 million credit facility from Salomon Smith Barney, Metromedia Fiber must secure funding commitments for $230 million in convertible notes, raise $200 million in new vendor financing, and convince vendors to defer the company's existing obligations under financing agreements. Metromedia Fiber has commitments for $180 million of the $230 million in convertible notes funding.
Metromedia said in its quarterly report that if it does not obtain such financing, it will need to restructure its outstanding debt or file for bankruptcy protection.
The solicitation statement said that Metromedia Fiber is also in discussions with "various of its trade creditors" to extend payment terms. Metromedia Fiber may issue common stock or promissory notes to "certain" of those vendors in return for an extension on payment terms, the statement said.
Salomon Smith Barney has committed $62.5 million to the $150 million credit facility, pending various conditions, with the balance coming from other lenders. The credit facility is secured by "substantially all of Metromedia Fiber's and its subsidiaries' assets and properties," and is senior to all other debt, according to the consent solicitation statement.
Other Metromedia investors include parent company Metromedia Co. and its controlling shareholder, John Kluge, widely thought to have committed to buy the $180 million in convertible notes. Verizon Communications (VZ) has written off most of its $1.7 billion investment in Metromedia Fiber and has said it is not part of the current financing drive.
In related news, Moody's downgraded Metromedia's debt Tuesday. Metromedia shares rose 2 cents, or 3%, to 68 cents a share, while bonds dropped between one and two points to between 23.5 cents to 24.5 cents on the dollar. |
