IWO Holdings Files For Ch. 11 Bankruptcy In Delaware

WASHINGTON -(Dow Jones)- IWO Holdings Inc. filed a voluntary petition for Chapter 11 bankruptcy Tuesday in the U.S. Bankruptcy Court in Wilmington, Del.

The Lake Charles, La.-based cellular company, an affiliate of Sprint PCS (FON), listed assets of $246.9 million and liabilities of $413.3 million, according to court papers obtained by Dow Jones Newswires.

IWO's three largest unsecured creditors are bondholders U.S. Bank, which holds a claim of $160 million, AIG Global Investment Group Inc., with a claim of $81.7 million, and the Bank of New York Co. (BK), which holds a claim of $64.3 million.

IWO Holdings, which provides digital wireless services to Sprint customers in upstate New York and parts of New Hampshire, Vermont, Massachusetts and Pennsylvania, cited lower-than-projected revenue, increased competition and high capital expenditure requirements as reasons for its current financial difficulty.

Specifically, the company said it hasn't been in compliance with restrictive covenants under a secured credit agreement and failed to make $13.9 million in interest payments from June 2003 through June 2004.

Along with its bankruptcy petition, the company filed a Chapter 11 reorganization plan and disclosure statement explaining the plan's terms.

The company announced in early December that it was soliciting votes from noteholders on the proposed reorganization plan and intended to file a "prepackaged" Chapter 11 bankruptcy petition.

Under the terms of the proposed reorganization plan, lenders and unsecured creditors would be repaid in full.

Senior noteholders, who hold about $160 million in notes, would receive 100% of the new equity in the reorganized company, according to court papers. The noteholders are expected to recover about 47% of their claims.

According to court papers, the company's old common stock, owned by US Unwired Inc. (UNWR), would be canceled.

In connection with the reorganization of IWO Holdings, IWO Escrow Co., a newly formed corporation, will offer $150 million in secured senior floating-rate notes due in seven years. The company will also issue $75 million in proceeds of senior discount notes due in 10 years.

According to court papers, the proceeds of the new notes offering will be used to repay all outstanding principal and accrued interest under IWO Holdings' secured credit agreement, which carried a balance of $215 million as of Nov. 30, 2004.

IWO Holdings also said it reached an agreement with Sprint PCS to settle disputes as of Oct. 31 last year. According to court papers, the agreement provides for the simplification and reduction of billing and pricing features, relief from certain build-out obligations, an increase in the reciprocal roaming rate and the settlement of monetary disputes.

The company said the new Sprint agreement will simplify the companies' business arrangement and provide greater clarity and predictability to revenue and expenses. -By Patrick Fitzgerald, Dow Jones Newswires; 202-862-3544; patrick.fitzgerald@dowjones.com -By Marie Beaudette, Dow Jones Newswires; 202-862-1354; marie.beaudette@dowjones.com

(END) Dow Jones Newswires "

Posted to the site on 4th January 2005