Wednesday, August 26, 2009

Who Owns Hawaiian Telecom Post Bankruptcy?

The Honolulu Advertiser reported:

Hawaiian Telcom plans to emerge from bankruptcy at the end of March under a reorganization plan that reduces its debt by nearly $800 million, the company said in a 333-page statement filed with the U.S. Bankruptcy Court Monday.

The article didn't state HT's owners at the end of March. The Carlyle Group shows Hawaiian Telecom as a current investment. The Honolulu article stated:

The company filed for bankruptcy protection Dec. 1 because of its heavy debt load and the loss of thousands of customers to wireless and other competitors.

The debt, which included $574.5 million in bank loans and about $500 million in bonds, helped finance Washington, D.C.-based The Carlyle Group's $1.6 billion takeover of the phone company in 2005.

Since Carlyle's takeover, Hawaiian Telcom has lost more than $200 million.

Who gets crammed down in the proceedings, loan, debt or equity holders? While not clear, the solution is to unwind the Carlyle deal.

Hawaiian Telcom's financial projections assume that the company's debt load will be sharply reduced, lowering its monthly interest payments.

Without that albatross, Hawaiian Telecom returns to profitability in 2011. If Carlyle keeps HT, they will have welched on 75 cents of every financing dollar.

To think the FDIC meets today to make it easier for private equity underwriters (PEU's) to buy struggling banks. Did you know the new rules will get a six month review?

(Update: Secured loan holders will own the company according to the Honolulu Star Bulletin)