Pac-West Enters Into Funding Arrangement With Columbia Ventures Corp.
16 November 2006 - 2:25AM
PR Newswire (US)
STOCKTON, Calif., Nov. 15 /PRNewswire-FirstCall/ -- Pac-West
Telecomm, Inc. (OTC:PACW.PK), a leading provider of next generation
and traditional voice communications services, today announced the
completion of a comprehensive restructuring of its financial
obligations centered around an investment and refinancing provided
by Columbia Ventures Corporation, a private investment company
focused principally on the domestic and international
telecommunications industry. As part of the restructuring, an
affiliate of Columbia Ventures purchased Pac-West's senior secured
credit facility, with an outstanding balance of approximately $8.8
million, from its senior lender, Comerica Bank. In connection with
this purchase, the purchaser stepped into the senior secured credit
facility. In addition, such facility was amended and restated to
provide, among other things, an increase in the maximum loan
commitment to $24.0 million, consisting of an $8.0 million
revolving credit facility and a $16.0 million term loan.
Approximately $8.8 million of such commitment was used to purchase
the senior credit facility. The availability of the undrawn balance
of such revolving and term loan commitments of approximately $7.2
million and $8.0 million, respectively, are subject to certain
conditions, the earliest of which could be satisfied on February 1,
2007. However, Pac-West will now have access to cash in the amount
of $11.3 million previously held by Comerica Bank under the terms
of a compensating balance arrangement. In addition, another
affiliate of Columbia Ventures purchased an aggregate of 879,117
shares of two series of newly-designated, non-voting, convertible
preferred stock for aggregate consideration of approximately $1.0
million. The two series of preferred stock, one of which was issued
today and the other of which will be issued upon receipt of
shareholder approval of an amendment to Pac-West's articles to
permit the issuance of the common stock issuable upon conversion of
such series of preferred stock, are generally convertible into
approximately 51% and 95%, respectively, of the outstanding common
stock of Pac-West on a fully-diluted basis, subject to satisfaction
of certain conditions, including receipt of requisite regulatory
approvals. Pac-West has also reached an agreement with Merrill
Lynch Capital to restructure approximately $5.7 million of its
obligations to them and an agreement with a key supplier to
restructure approximately $2.8 million of its obligation to them.
In addition, Pac-West has received a commitment from an investment
advisor with discretion over approximately $21.0 million of the
$36.1 million of outstanding principal amount of Pac-West's 13.5%
Senior Notes due 2009 to tender into an exchange offer made to all
holders of Senior Notes for newly designated 13.5% Notes due 2009.
Pac-West expects to conduct such exchange offer promptly under an
exemption from registration pursuant to Section 3(a)(9) under the
Securities Act of 1933, as amended. Pac-West, together with its
financial advisor, restructuring advisor, legal counsel and
auditors, considered a variety of restructuring alternatives,
including seeking court protection from creditors, and conducted an
extensive search for financing sources before determining to
proceed with the Columbia Ventures investment and refinancing. Hank
Carabelli, Pac-West's President & CEO, commented, "Pac-West is
nearing completion of our planned nationwide infrastructure
platform and service bundle that bridges the traditional public
switched network with more advanced IP services. The transaction we
have entered into with Columbia Ventures provides access to funding
required to continue to pursue these growth initiatives. Columbia
Ventures has a number of investments in companies like ourselves
who are pushing the boundaries of communications. We look forward
to working together on our common vision." Kenneth D. Peterson Jr.,
Columbia Ventures' Chairman & CEO, commented, "We are pleased
to assist Pac-West in the development of a nationwide
infrastructure platform that is designed to enable literally any
company to provide voice services to their customers. Pac-West has
a legacy of innovation in communications. We believe Pac-West has
taken a leadership position in enabling the next wave of
communications, and we are excited to be able to participate with
them." In connection with the restructuring, three Pac-West
directors, William Davidson, Frederick D. Lawrence and Thomas A.
Munro, have resigned and four persons designated by Columbia
Ventures, Kenneth D. Peterson, Jr., Stanley P. Hanks, James F.
Hensel and Richard A. Roman, have been appointed to serve on
Pac-West's board of directors, in each case, such resignations and
appointments with effect on November 21, 2006. Miller Buckfire
& Co., LLC served as Pac-West's financial advisor and AEG
Partners, LLC served as Pac-West's restructuring advisor in
connection with the restructuring. This communication is not an
offer to exchange Senior Notes for new 13.5% Notes or a
solicitation of an offer to exchange Senior Notes for new 13.5%
Notes. The offer to exchange Senior Notes for new 13.5% Notes is
expected to be made pursuant to an exemption from registration
pursuant to Section 3(a)(9) under the Securities Act of 1933, as
amended, solely by means of an offering circular and disclosure
statement and other documents provided to holders of the Senior
Notes. About Pac-West Telecomm, Inc. Pac-West is a provider of
advanced communications services that enable traditional and
next-generation providers, carriers, and service providers to
efficiently design, deploy, and deliver integrated communication
solutions. Currently, Pac-West has operations in California,
Nevada, Washington, Arizona, Utah, Oregon, Idaho, Washington D.C.,
Colorado, Pennsylvania, Florida, Maryland, New Jersey, North
Carolina, South Carolina, New York and Alabama. Founded in 1980,
Pac-West Telecomm, Inc. has been offering communication services to
its customers since 1982 and has been a leading provider of
wholesale services to Internet Service Providers. For more
information, visit http://www.pacwest.com/ . Forward-Looking
Statements In this press release, our use of the words "outlook,"
"expect," "anticipate," "estimate," "forecast," "project,"
"likely," "objective," "plan," "designed," "goal," "target," and
similar expressions is intended to identify forward-looking
statements. While these statements represent our current judgment
on what the future may hold, and we believe these judgments are
reasonable, actual results may differ materially due to numerous
important risk factors, including risk factors described in our
Annual Report on Form 10-K for the period ended December 31, 2005,
as filed with the SEC on March 29, 2006, which may be revised or
supplemented in subsequent reports filed by us with the SEC. Such
risk factors include, but are not limited to risks associated with:
our level of indebtedness; our inability to comply with the
covenants contained in, or the possibility of triggering a default
under, our borrowing arrangements, our inability to execute our
business plans and objectives, regulatory and legal uncertainty
with respect to intercarrier compensation payments received by us;
the migration to broadband Internet access affecting dial-up
Internet access; the loss of key executive officers that could
negatively impact our business prospects; an increase in our
network expenses; our principal competitors for local services and
potential additional competitors, which may have advantages that
may adversely affect our ability to compete with them. DATASOURCE:
Pac-West Telecomm, Inc. CONTACT: Reid Cox of Pac-West,
+1-209-926-3417, or Web site: http://www.pacwest.com/
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