Copyright 2002 The Deal L.L.C.
The Daily Deal…10/02/2002
Vancouver-based 360networks is poised to exit bankruptcy protection, after a bankruptcy judge in the Southern District of New York approved its reorganization plan late Tuesday, Oct. 1.
A judge in the Supreme Court of British Columbia signed off on the company’s Canadian plan of reorganization in early September, and 360networks hopes to emerge from Chapter 11 protection by Oct. 25. The company said no legal hurdles remain, and that it only needs to fulfill administrative duties before the plan’s effective date.
Under the plan, 360networks’ pre-petition bank lenders will receive $135 million in cash, $215 million in notes and 80.5 percent of the reorganized company’s stock. The company estimates the lenders are getting about 40 cents on the dollar for their $1.2 billion in claims.
General unsecured creditors in the US and Canada will get 10 percent and 2 percent of the stock, respectively, and a share of an unspecified amount of cash. Unsecured creditors had asserted more than $ 800 million in claims, about $300 million of which were recognized.
The remaining 7.5 percent of the company’s stock will go to employees.
Shareholders and bondholders with $ 1.4 billion of debt of a former affiliate, 360networks Inc., will not receive any compensation.
Along with administrative, tax and other priority claimants, some contractors holding liens will be repaid at 100 cents on the dollar.
Since filing for bankruptcy protection in June 2001, 360networks has refocused its operations in North America, sold assets in other regions, reduced its operating costs by cutting staff and lowered capital expenditures on its network. The company operates a 25,000-mile fiber-optic network and has another 725 miles of fiber in 48 cities in the US and Canada. When it was spun off from Canadian contracting giant Ledcor Industries Ltd. in 1998, the company, then called Worldwide Fiber, aspired to expand its network throughout North America, Europe, South America and Asia.
In court, a 360networks executive testified that the reorganization would make the company one of the more stable providers of “lit,” or operational fiber, and that its sales could increase because some customers have slowed the buildouts of their own networks.
The reorganized 360networks won’t be the only fiber operator with a slimmed-down balance sheet. Flag Telecom and Williams Communications have received court approval of their reorganization plans in the Southern District of New York recently, and are preparing to exit Chapter 11 protection in the coming weeks.