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Court OKs James Cable Reorg Plan

10/12/2003 8:00 PM Eastern

The U.S. Bankruptcy Court for the Middle District of Georgia approved a reorganization plan for James Cable LLC, a move that could see the once-troubled small-market MSO emerge from bankruptcy before the end of the year.

The court approved the plan on Oct. 6.

According to court documents, James Cable will swap the majority of its debt for equity, giving its largest bondholders 93% of the equity in the new company.

The remaining 7% would go to James Cable's current equity holders.

Cash option

Certain bondholders can also elect to take cash instead of equity for their holdings. According to documents filed with the Securities and Exchange Commission — James Cable is not publicly traded, but has about $88 million in public debt — those bondholders can opt to receive $540 in cash for each $1,000 in notes they hold.

James Cable chief financial officer Dan Shoemaker did not return calls seeking comment.

According to knowledgeable sources, GoldenTree Asset Management would end up with the majority of the equity in the company.

GoldenTree, which issued James Cable a $30 million line of credit in 2001, is headed by two high-yield bond veterans: chairman Leon Wagner, who worked with Michael Milken at Drexel Burnham Lambert, and Steven Tananbaum. It controls about 50% to 60% of James Cable's bond debt, sources said. Under the reorganization plan, GoldenTree would end up with at least that percentage in equity.

While only formed in 2000, GoldenTree has its share of cable experience. Along with Tananbaum — who had several cable holdings in his nine years in charge of the high-yield segment at New York Life Insurance Co.'s fund-management unit, MacKay Shields — GoldenTree management also includes former CIBC Oppenheimer Corp. head of media and telecommunications high-yield research Steve Shapiro.

Also on board: Thomas Shandell, former senior managing director and analyst at Bear Stearns & Co. Inc. He covered gambling, hotels, restaurants and leisure.

Bloomfield Hills, Mich.-based James Cable filed for Chapter 11 protection in June. It has about 63,000 basic subscribers in mostly rural communities in Oklahoma, Texas, Georgia, Louisiana, Colorado, Wyoming, Tennessee, Alabama and Florida.

James Cable started to run into trouble back in February, defaulting on a $5.4 million interest payment on 10.75% bonds, which triggered another default on a $30 million credit facility.

According to securities documents, the bankruptcy court set a Nov. 13 deadline for objections to the reorganization plan.

A confirmation hearing for the reorganization plan is set for Nov. 25.

"Assuming prompt confirmation of the plan, the company anticipates that it will complete its restructuring and emerge from Chapter 11 by December 2003," James Cable said in a filing.

No more filings

If confirmed, the reorganization plan would basically wipe out James Cable's public debt, removing the requirement that the MSO make quarterly financial filings with the SEC.

According to its 10-Q quarterly report filed with the SEC in August, James Cable had cash flow of about $6 million for the six months ended June 30, below the $6.5 million reported in the same period in 2002.

Revenue in the period was $21.5 million, down from $21.2 million a year earlier.

James Cable doesn't expect to receive a big cash infusion from GoldenTree. It is expected that with about $12 million in annualized cash flow, James Cable will be able to finance its capital expenditures internally.

Snapshot: James Cable
1H03 1H02
In millions of dollars, except for customers.
Source: Securities filings
Revenue 21.5 21.2
Operating Income 2.4 2.2
EBITDA 5.9 6.5
Basic customers 64,017 66,548

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