Acterna latest to file Chapter 11

Test company giant Acterna filed a proposed Plan of Reorganization and Disclosure Statement with the U.S. Bankruptcy Court for the Southern District of New York today. Acterna's Plan of Reorganization will reduce the company's long-term debt by $770 million, or 80%, and lower its annual cash interest expense by at least $45 million. The plan also is supported by the company's official committee of unsecured creditors. If all goes as planned the company expects to re-emerge from bankruptcy in early October. Guiding the company through this transition will be newly appointed Chief Financial Officer Grant Barber. Barber, an ex-Nortel Networks executive, joined Acterna in January as corporate vice president and controller. His appointment as CFO is immediate. He replaces John Ratliff, who will retire following the transition of his responsibilities. John Peeler, president and CEO of Acterna, said the terms of the company’s Chapter 11 filing were pre-negotiated with its senior secured debt holders, enabling them to file a plan of reorganization that already has the support of its largest creditors. As of June 30, 2003, Acterna had $53 million of cash on hand. The company also has access to a $30 million debtor-in-possession credit facility arranged by a group of banks led by JP Morgan Chase Bank and General Electric Capital Corp. The terms of Acterna's Plan of Reorganization call for a debt-for-equity swap that will give Acterna's senior secured debt holders 100 percent of the company's equity. Acterna will exit chapter 11 as a privately held company with long-term debt of approximately $190 million and quarterly cash interest expense of less than $2 million. Holders of Acterna's current convertible and subordinated notes will receive warrants having diminimus value. Unsecured creditors will receive a cash distribution of approximately 10 percent of their claims. Current equity holders will receive no distribution under the terms of the plan.