Mpower Files Refinancing Plan through Chapter 11 Petition

Mpower Holding Corp.(www.mpowercom.com) and its subsidiaries have filed a voluntary, pre-negotiated plan to abolish most of its long-term debt in the U.S. Bankruptcy Court in a Chapter 11 filing.

“With the support of a majority of our debt holders and preferred stockholders already in place we believe we are in a position to efficiently restructure our balance sheet and hope to complete this process as quickly as possible,” said Mpower Communications CEO Rolla P. Huff in a statement.

Rochester, N.Y.-based Mpower, a competitive local exchange carrier marketing voice and data services to small and medium-sized businesses, previously announced reaching an agreement with 99 percent of its 2010 senior note holders and more than two thirds of its preferred shareholders to support a recapitalization plan.

The plan would abolish $583.4 million in debt and preferred stock as well as $50 million in annual interest expense and $15 million in annual dividend payments in exchange for $19 million in cash and additional shares of common stock.

In total, the recapitalization plan would abolish 92 percent of the company’s long-term debt and preferred stock.

The competitive provider, which reported having roughly $150 million of cash on hand as of late February, said it already distributed $19 million to eligible senior note holders March 28.

As part of the refinancing plan, Mpower also would issue additional shares of common stock to preferred stockholders. Under the plan preferred and common stock holders would retain 15 percent of equity in the company.

If and when the court approves the plan the reorganized company will be operating with less than $50 million in debt, Huff said. “This would position Mpower as one of the few telecommunications companies in the industry with little or no debt, which we believe will make us a financially stronger partner for our customers, employees, shareholders and suppliers,” he said.

As a result of the bankruptcy filing, Mpower expects to trade its common and preferred stock on the NASD OTC under the symbols MPWRQ and MPWRPQ.

Mpower reported 2001 revenue of $195.7 million and losses on earnings before interest, taxes, depreciation and amortization (EBITDA) of $155.3 million.

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