Oct 17, 2001 : Primus Reduces Vendor Debt By Over $50M
📅 - Primus Telecommunications Group, Incorporated (primustel.com), announced yesterday that it has reduced its vendor debt and related obligations by over $50 million, which represents over 20% of itsexisting vendor debt. The vendor debt reduced by the company had annualinterest payments of over $4.5 million, and represents $16 million in futureinterest savings (assuming the vendor debt was held to maturity).
In commenting on the transactions, K. Paul Singh, chairman and CEO of Primusstated, "This reduction of our vendor debt represents another advancetowards our goal to attain financial self-sustainability. Late last year,when it became apparent that the public capital markets would not beavailable for an extended period, we developed a three-pronged strategy tobecome financially self-sustaining based on our own resources. The keyelements of that strategy were to accelerate EBITDA growth, strengthen ourbalance sheet by significantly reducing debt, and raise additionalfinancing.
"Last week we raised our EBITDA guidance for the third quarter of 2001 to arange of $6 million to $6.5 million and stated that our EBITDA goal of $10million for the fourth quarter of 2001 was attainable. This would representthe best quarterly EBITDA in the company's history.
"When we devised our strategy last year, our total debt was at $1.3 billion.Since that time we have reduced our high yield debt and convertibledebentures through a combination of open market purchases and exchange ofconvertible debentures for common stock. Of our remaining debt of less than$800 million, approximately $225 million represented vendor debt."
The transactions announced yesterday reduce the company's overall vendordebt to approximately $175 million. In aggregate, the over $50 million ofvendor debt and related obligations were extinguished with a cash payment ofless than 10% of the total.
"We are having discussions with our other major vendors with a view tofurther strengthening our balance sheet and bolstering our cash flow," Mr.Singh added. "We have been encouraged by the positive attitude exhibited bymany of our vendors who want to work with Primus to ensure that we are avigorous survivor."
In commenting on the transactions, K. Paul Singh, chairman and CEO of Primusstated, "This reduction of our vendor debt represents another advancetowards our goal to attain financial self-sustainability. Late last year,when it became apparent that the public capital markets would not beavailable for an extended period, we developed a three-pronged strategy tobecome financially self-sustaining based on our own resources. The keyelements of that strategy were to accelerate EBITDA growth, strengthen ourbalance sheet by significantly reducing debt, and raise additionalfinancing.
"Last week we raised our EBITDA guidance for the third quarter of 2001 to arange of $6 million to $6.5 million and stated that our EBITDA goal of $10million for the fourth quarter of 2001 was attainable. This would representthe best quarterly EBITDA in the company's history.
"When we devised our strategy last year, our total debt was at $1.3 billion.Since that time we have reduced our high yield debt and convertibledebentures through a combination of open market purchases and exchange ofconvertible debentures for common stock. Of our remaining debt of less than$800 million, approximately $225 million represented vendor debt."
The transactions announced yesterday reduce the company's overall vendordebt to approximately $175 million. In aggregate, the over $50 million ofvendor debt and related obligations were extinguished with a cash payment ofless than 10% of the total.
"We are having discussions with our other major vendors with a view tofurther strengthening our balance sheet and bolstering our cash flow," Mr.Singh added. "We have been encouraged by the positive attitude exhibited bymany of our vendors who want to work with Primus to ensure that we are avigorous survivor."
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