Georgia-based overbuilder Knology Inc. filed a prepackaged Chapter 11
bankruptcy petition in U.S. Bankruptcy Court for the Northern District of
Georgia Wednesday in an effort to restructure its debt.
Knology -- which has about 150,000 cable subscribers in five states -- had
been trying to restructure about $444 million in 11.875 percent bonds due 2007
through a tender offer, but it was unable to receive consent from 100 percent of
its bondholders.
Knology proposes to swap the $444 million in bonds for $193.5 million in 12
percent notes due 2009 and 20 percent equity interest in the company.
Knology first attempted to restructure the debt in August, and it received
consents from about 93 percent of its bondholders. But because it was required
to obtain consents from 100 percent, the company could not get the deal
done.
The overbuilder extended the offering period twice -- to Sept. 6 and 13 --
and warned bondholders that it would file for Chapter 11 if it did not receive
all of their consents. Apparently, that fell on deaf ears.
'Regrettably, we have to go the prepackaged route versus the consensual
exchange route because of a few holdouts,' Knology president and CEO Rodger
Johnson said in a prepared statement. 'We are excited, however, to bring closure
to this process and concentrate on growing our business.'
Knology's Chapter 11 is a bit different than other recent bankruptcies in the
cable industry. For one, the company is not in default on any of its debt, and
its first interest payment on the bond obligation isn't due until April
2003.
Knology chief financial officer Rob Mills, in an interview last week, said
the prepackaged Chapter 11 filing would allow the bond debt to be restructured
quickly.
'This is a very proactive approach,' Mills said. 'We can make the [interest]
payments as scheduled. We just approached the market to see if a restructuring
was warranted, and everybody agreed that it was.'
He added, 'We've never been in default, we've never missed an interest
payment. This was done to put the company on more solid
footing.'
