PhoneTel Technologies, Inc. Makes Announcement
CLEVELAND--(BUSINESS WIRE)--May 12, 1999--PhoneTel Technologies, Inc. (OTC BB:PHNT) announced today that is has commenced solicitation of acceptances of a plan of reorganization (the "Prepackaged Plan") from holders of its 12% Senior Notes due 2006 (the "Senior Notes") and holders of its 14% Cumulative Redeemable Convertible Preferred Stock (the "Preferred Stock"). The terms of the Prepackaged Plan are summarized in a Disclosure Statement mailed on May 11, 1999 to holders of record as of April 23, 1999 of the Senior Notes and the Preferred Stock.
The Company is seeking acceptances of the Prepackaged Plan in anticipation of the commencement of a case under Chapter 11 of the Bankruptcy Code (the "Case") in order to implement the previously announced restructuring of the Company through conversion of the Senior Notes into equity of the reorganized Company. The Company is seeking to obtain acceptances from (i) holders of at least two-thirds in amount and more than one-half in number of the Senior Notes actually voting, and (ii) from holders of at least two-thirds in amount of the Preferred Stock actually voting in order to commence the Case with the requisite acceptances to confirm the Prepackaged Plan. Unless extended by the Company, the voting deadline with respect to the Prepackaged Plan is 5:00 P.M. Eastern Time on June 11, 1999.
Under the Prepackaged Plan, claims of employees, trade and certain other creditors of the Company, other than Senior Note claims, would be paid in full in the ordinary course, with the Company retaining its rights and defense with respect to such claims.
In the event that the requisite acceptances are obtained, it is the intention of the Company to promptly file the Case and seek confirmation of the Prepackaged Plan. The Company will continue to operate its business under Chapter 11 in the ordinary course.
In January 1999, the Company announced that it had reached an agreement in principle with an unofficial committee of Senior Note holders providing for the conversion of the Senior Notes into 95% of the reorganized Company's common stock (the "Restructuring"). The unofficial committee is comprised of certain holders of Senior Notes currently representing approximately 59.3% in principal amount of all holders of the Senior Notes. The Restructuring, as implemented by the Prepackaged Plan, further provides that existing preferred and common shareholders would receive the remaining 5% of the reorganized Company's common stock (as well as warrants to purchase approximately 11% of the reorganized Company's common stock at an exercise price of $10.50 per share, assuming 10,000,000 common shares outstanding post-reorganization). These equity interests would be subject to dilution by certain other equity issuances, including issuances upon the exercise of certain warrants and awards to purchase up to an aggregate of 5% of the common stock under a new management incentive plan proposed as part of the Prepackaged Plan.
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