Classic Defaults on Payments8/01/2001 9:05 AM Eastern
Classic Communications Inc. has discontinued negotiations with lenders
concerning a $75 million loan.
As a result, the MSO said, it has defaulted on one interest payment on its
outstanding debt and it is prohibited from making another payment due
Classic said it was unable to make an interest payment due July 6 under a
$240 million credit agreement and, as a result, it was prohibited from making a
$7.2 million interest payment on its senior secured notes due Aug. 1.
In a prepared statement, the company said it has hired Credit Suisse First
Boston as a financial adviser to look into other funding sources.
The loan -- from an affiliate of Classic's controlling shareholder, Brera
Capital Partners LLC, and Credit Suisse First Boston -- was first announced in
May and needed the approval of the company's other lenders.
But it appears that those lenders have rejected the deal -- a move that puts
Classic's future in doubt. The MSO needed the money to meet debt obligations and
to fund operations.
Classic said in the statement that Credit Suisse has begun discussions with
its senior lenders and holders of its subordinated debt to pursue a consensual
restructuring of the debt.
In tandem with its most recent press release, Classic also said revenue in
the second quarter would be flat at $46 million and cash flow would be down 10.5
percent to $17 million from $19 million in the same period last year. Basic
subscribers were at 376,500 for the period, up slightly from 374,804 customers
in the first quarter of this year.
Classic also said it has received notice from the National Association of
Securities Dealers that its stock has failed to maintain a minimum $1-per-share
price, and it could be delisted from the NASDAQ system.
Classic has until Sept. 18 to boost its stock price to $1 and to maintain at
least that level for 10 consecutive days. The stock -- which dropped 10 cents
per share to 17 cents apiece Wednesday -- has been trading at under $1 for the
past 59 consecutive days.
Classic went public Dec. 8, 1999, with an initial pubic offering price of $25
per share. The stock -- which reached as high as $39 that same month -- has been
in a free fall ever since.