Details of FiberTower’s Proposed Plan of Reorganization & Agreement with Holders of 2016 Notes

As previously reported, FiberTower Corp. voluntarily filed for chapter 11 protection in the Northern District of Texas bankruptcy court on Tuesday as part of a pre-negotiated plan to reorganize the company. Prior to the filing, FiberTower entered into a Plan Support Agreement with a group of the holders of its 9.00% Senior Secured Notes due 2016 which sets forth the terms of the reorganization plan which those holders have agreed to support. The consenting noteholders hold approximately $85.6 million in 2016 Notes, or approximately 65% of the total outstanding principal amount of those Notes ($132 million).

According to bankruptcy court filings (you can find the court filing containing the data for this report by clicking here), FiberTower’s books and records reflected total combined assets of $188 million and total combined liabilities of $211 million, with the companies holding unrestricted cash of $23 million. In addition, the same filings state that FTI Consulting, Inc. (FiberTower’s proposed financial advisor in the bankruptcy cases) has performed “preliminary valuation work [that] shows that the Debtors’ enterprise value is materially less than $132 million – i.e., the approximate principal amount of the 2016 Notes . . . outstanding as of the Petition Date.” In the first six months of 2012, FiberTower’s operations generated total revenue of $33 million.

Under the terms of the proposed plan of reorganization, the holders of the outstanding 2016 Notes will receive all of the equity in the reorganized FiberTower (and all of the equity in FiberTower’s debtor subsidiaries) in full satisfaction of their 2016 Note claims. The equity issued to the noteholders will be subject to dilution by a “yet-to-be-determined Management Incentive Plan”. All other claims against FiberTower will receive no recovery under the proposed terms of the plan in exchange for their claims and existing equity will be extinguished and cancelled with shareholders also receiving no recovery.

The holders of 2016 Notes who are signatories to the Plan Support Agreement are: Brencourt Credit Opportunities Master Fund, L.P.; Citigroup Pension Dalton Distressed Credit; Investin Pro FMBA Dalton Distressed Debt; Dalton Distressed Credit (Master) Fund Ltd.; Cowen Overseas Investment LP; Solus Core Opportunities Master Fund Ltd.; SOLA Ltd; Solus Investment Co LLC; Solus Investment Co II LLC; and Zazove Associates LLC.

To get a copy of the proposed plan of reorganization and the Plan Support Agreement (which were both filed as exhibits to the Declaration of Kurt Van Wagenen, FiberTower’s President and CEO), please click here to visit our court filing database.

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