RCN Corp.'s bank debt levels continue to hold their ground despite warnings from the company that Chapter 11 reorganization might be up ahead. Traders quoted the name in the 96 1/2-98 range and noted that the company will likely pursue a pre-packaged plan of reorganization. The bank debt, of which about $521 million in term loans were outstanding as of Sept. 30, is senior secured and collateralized by substantially all of the assets of the company and its subsidiaries.
In a statement, RCN noted that it is continuing negotiations with its senior secured lenders and an ad hoc committee of holders of its senior notes regarding a restructuring of its balance sheet. In connection with these negotiations, RCN will not make the approximately $10.3 million interest payment due Jan. 15, 2004 on its 10 1/8% notes due 2010. RCN, the lenders and members of the noteholders committee, have entered into forbearance agreements and have agreed not to declare the missed interest payment as an event of default. These forbearance agreements will expire on March 1, 2004, unless extended
In its last quarterly filing, RCN said it would have to outperform its business plan, improve its operational efficiencies, raise additional capital, amend its credit, restructure its balance sheet, or pursue additional asset sales in order to continue complying with its covenants and meet its liquidity needs through mid 2004 and beyond. Calls to company officials were not returned by press time.
Motor Coach Industries International was downgraded by Standard & Poor's last week, but the bank debt levels for the relatively off-the-run name remained unchanged around the mid-80s. No trades could be confirmed. S&P lowered the company's corporate credit and senior secured debt ratings to CCC citing concerns that weak cash-flow generation could cause the company to default on its debt obligations. Motor Coach also needs to confront its covenant issues or risk acceleration on its bank loans.
Motor Coach has about $520 million in debt outstanding. The company's interest coverage multiple is around 1.4 times and it is about 6.5 times levered. Joseph Littlejohn & Levy is the company's majority shareholder. Calls to Allan Swanson, Motor Coach's cfo, were referred to a spokeswoman, who did not return calls by press time.