RCN Corp. said it has uncovered inconsistencies in terms related to about $8
million in interest payments made this week on senior discount notes.
The Princeton, N.J.-based competitive cable operator is now investigating the
terms of the 11% senior discount notes due in 2008, particularly focusing on the
basic economics of the arrangement.
Although it believes bondholders may not be eligible to receive funds from
the interest payment, RCN has decided to pay interest pending further
investigation, according to a company statement.
This was the first interest payment on the notes, which were issued in June
1998 at a discount compared with the combined principal amount once they
RCN will consider several actions based on the investigation’s findings,
including cutting future interest or payments or seeking a legal remedy in
court, according to the statement.