Broadview Networks, a competitive service provider, on Friday said it requested the U.S. Bankruptcy Court in Manhattan to grant approval of a new $25 million loan.
The New York-based CLEC, reports Dow Jones, will use these funds to fulfill two purposes: Make cash payouts mandated in its reorganization plan and get more funds for the restructured company.
Last week, the Manhattan bankruptcy court approved a separate $25 million loan, which the company will use as it moves through the Chapter 11 process.
According to court documents, Broadview said the financing that's being provided by CIT Finance LLC is a "key component" of its reorganization plan. CIT said it will provide an additional $10 million if the service provider needs it during this process.
In late August, Broadview filed for Chapter 11 bankruptcy protection with a "pre-packaged" restructuring plan. This plan was previously approved by senior secured note holders on July 13.
Under the previously announced plan, Broadview said senior note holders that were owed $317 million would be paid with $150 million in new notes and new stock, while $13.9 million owed to CIT Group Inc. will be paid in full and carries over unsecured debt in full to the reorganized company.
However, Broadview could not raise the money required to pay the notes off when they reached their maturity on Sept. 1.
"It became clear that a consensual balance-sheet restructuring with holders of the senior secured notes was the company's best option to maximize value for the company's stakeholders," Broadview said.
The service provider said it plans to complete the restructuring process, a move that will lower its interest payments by $18 million per year by the fourth quarter this year.
- Total Telecom via Dow Jones has this article
Broadview Networks files for Chapter 11 protection
Brian Crotty, Chief Operating Officer, Broadview Networks
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