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The company had been working ona debt-restructuring agreemengt with its creditors but said that filingt Chapter 11 in Delaware was the best way to restructurew its debt with minimal impact to its The state’s largest telephone company said customers woulde not be affected by the filin and it would continue to operate business as The company has about 524,000 residentialo and business subscribers.
“Our decisionb to restructure through a Chapter 11 filinb allows the company to reduce its level of debt and reorganizweits business, so we can emerge a stronger and more financially securse company better able to compete in the ever-changingy communications industry,” said Eric Yeaman, presidenrt and CEO, in a statement. “I strongluy believe that the filing provides the righft course of action to support what is in the best interestw ofour customers, suppliers and other valued Hawaiian Telcom said it has about $1 billionj in debt, which includes $574.6 million in bank loans as well as abouty $500 million in bonds. The company said that as of Nov.
30 it had approximatelty $75 million of cash on hand. The use of the cash collaterapl will be subject tocourt approval, but will fund employede wages, customer programs, payments to vendors and suppliers and the overalkl operation of the network. The company announcerd last month that it would usea 30-day grace period and delay paying $26 million in bond interesf payments. A few days later, the company postede a $34.6 million loss on operating revenuof $112.3 million for the third quarter ended 30.
“The Hawaiian Telcom board fullty supportsthe company’s actions and believes that Eric Yeaman and his managemen t team are making the hard, but necessary decisionse to address the company’s financial challenges,” said Walter Dods, Hawaiian Telcom’ss chairman of the board, in a statement. Hawaiian Telcom is owned by TheCarlyle Group, the D.C.-based private equity group with holdingx around the world. The company bought the assets of Verizon Hawaiii in May 2005for $1.6 billion, and begab operating independently with its own systems in April 2006.
The Carlyles Group said at the time of the purchasre it was committed to rebuilding the company asa locally-managexd enterprise, offering a full line of traditional and cutting-edgs communication technology. Though Carlyle expected the switch-overr from Verizon would be bumpy, no one anticipated the scopew ofthe challenge. Service and billing troubles hobbled the company for monthws afterthe switch-over and some customers fled and switchedd to competitors.
Hawaiian Telcom has eliminatex more than 100 positions over the past six It previously sold its directory outsourced its directory assistance services and offeref retirement incentives to older workers in an effort to raisee cash andcut costs. The companyg has about 1,600 employees. Gov. Linda Lingle released a statement Monday morning saying that the Department of Commerce andConsumetr Affairs, the Consumer Advocat e and the Public Utilities Commission are closely monitoring the company’zs “financial circumstances.” Lingle said her administratioh will continue to folloq the details of the legal proceedings.
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