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FiberTower Plan Wipes Out Unsecureds, Shareholders

Thursday, 19 July 2012 00:57
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FiberTower Corporation and its subsidiaries, which filed for Chapter 11 protection (Bankr. N.D. Tex. Case Nos. 12-44027 to
12-44031) on July 17, 2012, have a plan support agreement with secured noteholders.
 
The Plan Support Agreement will be terminated if:
 
-- the Debtors fail to commence the Chapter 11 cases and file a
Plan on or before July 18, 2012;
 
-- The Debtors fail to file a motion seeking approval of the
Disclosure Statement on or before 45 days following the
Petition Date;
 
-- Approval of the Disclosure Statement is not obtained on or
before 90 days following the Petition Date;
 
-- An order confirming the Plan is not entered on or before 145
Days following the Petition Date.
 
-- The effective date of the Plan has not occurred on or before
240 days following the Petition Date.
 
Based in San Francisco, California-FiberTower Corporation is a provider of facilities-based backhaul services to wireless carriers.  As of the Petition Date, the Debtors provide hybrid fiber-fixed wireless service to 5,390 customer locations at 3,188 deployed sites in 13 markets throughout the U.S.
 
As of June 30, 2012, the Debtors' books and records reflected total combined assets, at book value, of $188 million and total liabilities of $211 million.   For the six months ending June 30, 2012, the Debtors had total revenue of $33 million.
 
Kurt Van Wagenen, president and CEO, said in a court filing that the Debtors' preliminary valuation work shows that the Debtors' enterprise value is materially less than $132 million -- the approximate amount of the 2016 notes outstanding as of the Petition Date.  The Debtor owes $13 million in principal under 9% senior secured notes due 2016 that it issued in December 2009 to restructure its balance sheet.  There is also $37 million principal amount outstanding under certain 9% senior secured convertible notes due 2012 that were issued in 2006.
 
The Plan Support Agreement has been executed by holders of the 2016 Notes who in the aggregate hold approximately 65% of the outstanding principal amount of the notes.
 
In summary, the proposed plan negotiated with the holders of 2016 notes provides that holders of 2016 secured notes issued by FiberTower Corp. will have their claims allowed in the amount of $132.0 million plus interest and fees and will receive (i) 100% of the New FiberTower common stock , and (ii) 100% of the equity in the debtor-subsidiaries.
 
Holders of 2012 notes, general unsecured claims estimated to total $30 million, and equity interests in FiberTower Corp. will not receive any property under the Plan.  They are deemed to reject the Plan.
 
Only the 2016 noteholders are voting on the Plan.
 
The Debtors have shared financial projections for the next five years:
 
$ in 000s        2013      2014    2015     2016     2017
----      ----    ----     ----     ----
Total Net Revenue     $22,733  $17,120  $22,837  $29,109  $32,502
EBITDA                   $625   $1,673   $5,988  $10,611  $15,139
Ending Cash            $4,986   $4,395   $9,285  $18,800  $32,003
 
The Company said in a statement that the Plan will eliminate the Company's long-term debt enabling the Company to emerge from bankruptcy as a stronger business.
 
During the Chapter 11 process, the Company intends to run "business as usual" and will (i) operate its backhaul network; (ii) pay "post-petition" vendors, suppliers and other business partners for goods and services provided; and (iii) pay employees' wages and salaries and maintain current medical, dental, life insurance, disability and other benefits.
 
The Company has reached a consensual agreement with the Ad Hoc Group to use cash collateral.
 
FTI Consulting Inc. is the financial advisor to the Debtors.  Attorneys at Andrews Kurth LLP serve as counsel to the Debtors.
 
 
FiberTower Corporation and its subsidiaries, which filed for Chapter 11 protection (Bankr. N.D. Tex. Case Nos. 12-44027 to 12-44031) on July 17, 2012, have a plan support agreement with secured noteholders.

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