Primus Canada sees upside to bankruptcy of US parent

Primus Telecommunications Group Inc. and its three holding companies filed for chapter 11 bankruptcy protection in the US earlier this week, but the move spells good news for the company’s Canadian arm. According to Primus Telecommunications Canada president Ted Chislett, the company will be able to re-invest more of its profits in local operations after the bankruptcy process is completed. “The interest will be cut in half and that will mean there will be a lot more money available for us to invest in expanding our network doing acquisitions. So it’s all good news from our perspective here,” Chislett tells Network Letter. While Chislett wouldn’t talk about the potential economic windfall for Primus Canada, he says the company is expecting to get additional financial resources down the road. “Since 1997, we have invested over $500 million in acquiring customers and network facilities here in Canada,” he says, adding that once the bankruptcy process runs its course, Primus Canada will get to keep a larger share of its profits to continuing building the company here. “So our hope is we’ll be able to continue doing that sort of investment here.” Primus Canada has been a solid performer financial over the years with 40 consecutive quarters of positive earning. The company says that it will be business as usual north of the 49th parallel without any impact on employees, customers, suppliers or business partners. Chislett says the reasons for the proactive bankruptcy protection filing are largely the result of the difficult economic times. “It’s pretty brutal out there,” he says. “We have some debt maturities that are coming due later this year which in today’s economic environment, you probably wouldn’t be able to refinance. That’s why they’re taking a proactive step of dealing with the lenders and reaching this agreement.” In announcing chapter 11 bankruptcy protection, Primus says that it had reached an agreement with its note holders to reduce debt by US$315 million, or by more than 50%, reduce interest payments by more than 50% and extend certain debt maturities. “Confirmation of the plan of reorganization will put Primus in a stronger position to weather current global economic conditions and should enable us to take advantage of opportunities that may arise. After emergence, the holding companies will have a stronger balance sheet and should have improved free cash flow,” Paul Singh, Primus chair and CEO, said in a March 16 statement. Primus Canada is Canada’s second largest alternative communications company and fifth largest ISP.

Primus Canada sees upside to bankruptcy of US parent

News | March 18, 2009

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