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Network Communications Strikes Restructuring Agreement

Deal will cut debt from approximately $300 million to $115 million.



Matt Kinsman By Matt Kinsman
11/17/2010

Lawrenceville, Georgia-based housing publisher Network Communications Inc. has struck an agreement with the majority of its shareholders over a balance sheet restructuring to reduce the company's outstanding indebtedness from approximately $300 million to approximately $115 million, as well as slash its annual interest expense.

The new restructuring agreement includes the extension and amendment of the company's existing revolving loan and term loan facilities; the cancellation of NCI's outstanding 10-3/4 senior notes due 2013 in the aggregate principal amount of $175 million in exchange for 100 percent of the new common stock of NCI and new senior subordinated pay-in-kind notes in an aggregate principal amount of up to $45 million; the cancellation of NCI's 12 percent senior subordinated notes, due 2013, in the aggregate principal amount of $25 million (accredited to approximately $49 million) in exchange for a portion of the warrants to purchase 5 percent of the New Common Stock of NCI at an exercise price that implies a total enterprise value of $200 million; and the cancellation of the company's existing equity interests in exchange for a portion of the warrants.

In June, NCI defaulted on its interest payment on its 10-3/4 senior notes due 2013, which prompted the restructuring negotiations. According to the company's most recent financial statement filed with the SEC, NCI reported a net loss of $10.5 million through its fiscal third quarter (period ended December 6), compared to a loss of $83.4 during the same period the prior year. Revenues were $105.1 million, a decline of 24.2 percent.

In January 2010, NCI chairman and CEO Dan McCarthy and CFO Gerry Parker signed new five-year contracts with Court Square Capital Partners, the owners of NCI.

Matt Kinsman By Matt Kinsman
11/17/2010




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