Horizon PCS seeks help with debt restructuring
CHILLICOTHE, Ohio — Sprint PCS affiliate Horizon PCS Inc. said it has hired investment banking firm Berenson & Company to assist it in renegotiating and restructuring its equity, debt and other contractual obligations after the carrier said it would probably violate one or more covenants under its secured credit facility this year.
Horizon explained that if it’s unable to restructure its current debt and other contractual obligations it would need to obtain financing to satisfy or refinance its current obligations, find a purchaser or strategic partner for its business or sell off its assets or seek bankruptcy protection.
Horizon said it planned to take a number of steps in the next six months to remedy its current financial position including renegotiating the debt covenants under its senior secured facility, obtain waivers or a forbearance agreement related to defaults under its senior credit facility, enter into negotiations with its lenders to obtain the right to borrow under a $95 million line of credit and to modify the repayment terms of the facility, enter into negotiations with Sprint and Ntelos Inc. to adjust the amounts charged to Horizon and pursue other means to reduce operating expenses and improve cash flow.
Horizon also reported fourth quarter and full-year financial results for 2002. Fourth-quarter revenues increased from $44.1 million in 2001 to $60 million last year, while full-year revenues nearly doubled from $124.3 million in 2001 to $216 million last year.
Net losses applicable to common shareholders also increased from $40.8 million during the fourth quarter of 2001, a loss of 70 cents per share, to $60.3 million last year, a loss of $1.03 per share. Full-year net losses increased from $124.4 million in 2001, a loss of $2.13 per share, to $188.7 million last year, a loss of $3.23 per share.
The carrier reported 29,000 net customer additions during the fourth quarter of 2002 compared with 47,500 net customer additions during the fourth quarter of 2001, and ended last year with 270,900 customers. Horizon said 74 percent of its customer base were prime credit class customers at the end of last year.