HawTel gets extension to file plans for turnaround


POSTED: Saturday, March 14, 2009

Hawaiian Telcom Communications Inc. has won an extension until June 30 to file a turnaround plan and address a “;myriad of creditor concerns.”;

U.S. Bankruptcy Judge Lloyd King granted the so-called exclusivity extension Thursday and gave the company through Aug. 31 to seek acceptance of a plan from creditors. Creditors seeking a total of $1.27 billion have the right to file competing plans once the deadline expires.

Hawaiian Telcom, owned by Washington, D.C.-based private-equity firm Carlyle Group, told King last month that it needed more time to analyze restructuring alternatives. Hawaiian Telecom, with 1,450 employees, is the state's biggest phone company.

The company filed a Chap- ter 11 petition on Dec. 1, listing assets of $1.35 billion. It blamed the bankruptcy partly on transition difficulties after Carlyle bought Hawaiian Telcom from Verizon Communications Inc. in 2005 for $1.6 billion.

Hawaiian Telcom told the judge last month that it can't afford to pay $6.6 million in interest each quarter to secured lenders for the right to use cash that has been set aside as collateral for them. Without the payments, the company said its cash flow would be at a break-even point in 2009.

The “;myriad”; of creditor concerns were sparked by the start of the bankruptcy, the relocation to Hawaii and completion of a business plan, the company said in a court filing.

Hawaiian Telcom's liabilities include $574.5 million secured by all the assets, senior unsecured notes of $350 million, $150 million in subordinated notes and $40 million owing to trade suppliers, court papers show.

The case was originally filed in U.S. Bankruptcy Court in Wilmington, Del., and was transferred to Honolulu in December to be closer to creditors.