Netia, Noteholders and Majority Shareholders reach consensual agreement on economic terms of debt restructuring
WARSAW, Poland - March 5, 2002 - Netia Holdings S.A. (Nasdaq: NTIA, WSE: NET), Poland's largest alternative provider of fixed-line telecommunications services, today announced that Netia, an Ad Hoc Committee of its Noteholders, certain financial creditors, and Telia AB and the Warburg Pincus entities that own its shares (the "Warburg Pincus Entities"), each acting separately as Netia's largest shareholders, have agreed to implement a restructuring plan designed to strengthen Netia's capital structure.
A Restructuring Agreement will be signed today by Netia, Telia and the Warburg Pincus Entities, and it is also expected that the first of the Noteholders will sign the Restructuring Agreement today. The Company has been informed that the Extraordinary General Meeting of Netia's Shareholders scheduled for today will be proposed to be adjourned for one week in order to allow the Ad Hoc Committee and other Noteholders to sign the Restructuring Agreement.
Subject to the consent of 95% of Noteholders and the completion of definitive legal documentation by all parties, the restructuring will involve the issuance of new shares and debt by Netia in exchange for the outstanding Notes held by its Noteholders and the claims of the other financial creditors.
Pursuant to the proposed restructuring, the Noteholders and certain financial creditors will receive new shares in the Company representing 91% of the Company's post-restructuring share capital. Those creditors will also receive in aggregate EUR 50 million of new Senior Secured Notes issued by a Dutch finance subsidiary of the Company and guaranteed by the Company and its significant subsidiaries. The Company's existing shareholders will be issued two and three year freely transferable and assignable warrants, with each tranche covering 7.5%, together, totaling 15%, of the post-restructuring share capital of the Company (after the provision of 5% of the issued ordinary share capital to the Company for a management option plan as described below). The warrants will be listed on the Warsaw Stock Exchange. The strike price applicable to warrants in each tranche will correspond with the volume weighted average share price for the 30 trading days beginning 31 days following the successful closing of the restructuring. Netia will seek to pay its trade creditors in full as their claims become due and payable. Following these repayments, it is anticipated that the only remaining material funded indebtedness of the Company will be the new Senior Secured Notes. The Company will also establish a key employee incentive plan and a stock option plan covering up to 5% of the post-restructuring share capital of the Company before the issuance of the warrants. The restructuring will be effected by means of an exchange offer within the court-based plans of arrangement in both the Netherlands and Poland.
Kjell-Ove Blom, Netia's acting CEO and Chief Operating Officer, commented: "We are very pleased to announce this agreement for the financial restructuring of Netia. The restructuring will allow us to establish a solid capital structure and foundation to enable Netia's healthy future development. Netia's management and employees can now focus on improving its operations."
Avi Hochman, Netia's Chief Financial Officer and Vice President, Finance, stated: "We are happy to have reached this agreement with all parties involved, which is designed to give Netia a new capital structure and a strong balance sheet with only the EUR 50 million of new Senior Secured Notes. The implementation of the restructuring steps outlined in the agreement will greatly improve the Company's balance sheet and give Netia a strong basis for growth and development in the Polish telecom market."
Netia is the leading alternative fixed-line telecommunications provider in Poland. Netia provides a broad range of telecommunications services including voice, data and Internet-access and commercial network services. Netia's American Depositary Shares ("ADSs") are listed on the Nasdaq National Market (NTIA), and the Company's ordinary shares are listed on the Warsaw Stock Exchange. Netia owns, operates and continues to build a state-of-the-art fiber-optic network that, as at December 31, 2001, had connected 343,802 active subscriber lines, including 97,994 business lines. Netia currently provides voice telephone services in 24 territories throughout Poland, including in six of Poland's ten largest cities.
Some of the information contained in this news release contains forward-looking statements. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those in the forward-looking statements as a result of various factors. For a more detailed description of these risks and factors, please see the Company's filings with the Securities and Exchange Commission, including its Annual Report on Form 20-F filed with the Commission on April 30, 2001, its Current Report on Form 6-K filed with the Commission on May 15, 2001, its Current Report on Form 6-K filed with the Commission on August 7, 2001, its Current Report on Form 6-K filed with the Commission on November 6, 2001, and its Current Report on Form 6-K filed with the Commission on January 18, 2002. The Company undertakes no obligation to publicly update or revise any forward-looking statements.
These materials are not an offer for sale of securities in the United States. Securities may not be offered or sold in the United States absent registration under the U.S. Securities Act of 1933 or an exemption from registration. Any public offering of securities to be made in the United States will be made by means of a prospectus that will contain detailed information about the Company and management, as well as financial statements.