By Melodie Warner
Otelco Inc. (OTT) voluntarily filed for Chapter 11 bankruptcy
protection in order to implement its previously announced
prepackaged restructuring plan that will reduce its overall debt by
roughly $135 million.
The wireline telecommunication services provider, which ended
the third quarter with total liabilities of about $330.1 million,
first disclosed its bankruptcy intentions last month.
Otelco on Monday said all of its senior lenders and holders of
more than 96% of its senior subordinated notes outstanding voted in
favor of the plan.
The Company expects to complete its financial restructuring at
the end of the second quarter. The restructuring plan and other
relief is still subject to court approval, regulatory approvals and
other customary closing conditions.
Otelco had said in April Time Warner Cable Inc. (TWC) wouldn't
renew its contract for wholesale network connections. The company
expected the loss of the Time Warner Cable contract, which expired
Dec. 31, and recent rulings by the U.S. Federal Communication
Commission, to negatively impact its revenue.
The company also said last month its income deposit security
units--which consist of common stock and senior subordinated
notes--would be cancelled and the existing senior subordinated debt
will be converted into equity.
IDSs closed Friday at $1.62 and were inactive premarket. They
have dropped 88% over the past 12 months.
Write to Melodie Warner at melodie.warner@dowjones.com
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