Microcell's bank debt will be paid down and existing equity investors paid out in full when Rogers takes control. Many of the holders of the equity are distressed debt investors that bought the secured debt at a significant discount two years ago. The company was reorganized last year with around C$600 million in secured debt converted into equity and new bank debt.
Harbert Management Corp., Wayzata Investment Partners, Greenlight Capital, York Capital Management, J.P. Morgan Chase and COM Canada, a private holding company of Craig McCaw, represent about 50-60% of the outstanding shares, according to Thane Fotopoulos, director of investor relations for Microcell.
Microcell was last in the bank debt market in March with a refinancing led by J.P. Morgan and Credit Suisse First Boston. At the end of June Microcell's outstanding bank debt was a C$197.5 million first-lien term loan and C$199.5 million second-lien term loan. The first-lien term loan was priced at LIBOR plus 4% and the second-lien term loan priced at LIBOR plus 7% with a 2% LIBOR floor. The company used swaps to change the first lien spread to LIBOR plus 5.085% and the second lien to LIBOR plus 8.485%, Fotopoulos said. The swaps also enabled the interest rate to be paid in Canadian dollars rather than U.S. dollars, he added.