Microcell Telecommunications' bank debt climbed from the low 70s into the 76-80 range last week with a piece of the debt trading in the 77 context. Dealers said investors are anticipating a faster restructuring than anticipated after the company filed its plan of reorganization last month. The bank debt has rebounded significantly over the last three months. In November, the paper climbed out of the 20s into the 35-40 range as lenders predicted a restructuring that would be good for those holding onto the bank debt (LMW, 11/11).
Under the current plan for reorganization, secured creditors holding almost C$600 million in claims would receive C$300 million of five-year "B" tranche debt issued by the company's Amalco subsidiary, but will have a second lien on all assets of the reorganized Microcell and Amalco. The first lien will be awarded to holders of the $25-$75 million exit facility. The secured creditors will also be given about C$50 million of tranche "C" 8% senior notes as well as roughly C$250 million of distributions in the form of first and second instruments. J.P. Morgan is the lead on Microcell's bank debt.
Microcell has made a request to the tax authorities to make the preferred shares issued under the restructuring plan distressed preferred shares so that the first and second instruments will be issued as preferred shares that have a higher seniority, explained Thane Fotoboulos, Microcell's director of investor relations. If the application is denied, the first and second shares will be issued as subordinate convertible notes, he added. Creditors have the opportunity to vote for or against the plan on March 17 and each credit class must win at least two-thirds support of its members. Microcell is looking to emerge from restructuring between the end of March and the end of April.