Microcell Telecommunications Completes Recapitalization Plan

On May 1, 2003, Montreal-based Microcell Telecommunications Inc. completed its recapitalization plan pursuant to the Companies’ Creditors Arrangement Act (CCAA) and the Canada Business Corporations Act.

The plan was approved by majorities of secured lenders and unsecured noteholders of the company at meetings of creditors held on March 17. The plan was sanctioned by Justice Daniel Tingley of the Superior Court of Quebec on March 18. Implementation of the plan marks the completion of the process instituted under the CCAA on January 3, and the successful recapitalization of the company pursuant to which the company’s consolidated debt level was reduced from approximately $2 billion to $350 million.

Upon implementation of the plan, Microcell’s existing secured debt of approximately $600 million was exchanged for a package of consideration consisting of $350 million of new secured debt and first and second preferred shares which, assuming conversion of such preferred shares, represent 68 per cent of the common equity of the recapitalized company before exercise of warrants and management options. Microcell’s existing unsecured debt of approximately $1.4 billion was exchanged for a package of consideration consisting of second preferred shares, common shares and warrants which, assuming conversion of such preferred shares, represent 31.9 per cent of the common equity of the recapitalized company before exercise of warrants and management options. The existing shareholders saw their existing shareholdings exchanged for the remaining common equity, as well as warrants of the recapitalized company. The recapitalized company, which emerged from the plan retained the current name, Microcell Telecommunications Inc.

Microcell was represented in-house by Jocelyn Côté, vice-president, legal, and assistant secretary, and Marie-Claude Michaud, director, legal; assisted by Stikeman Elliott LLP with a team that included Sidney Horn and Marc Barbeau, and supported by Nicolas Beugnot, Claire Zikovsky, Selin Bastin and Thomas Lellouche (corporate), Nathalie Gosselin, Martin Corbo, Lewis Smith and Kelly Niebergall (corporate finance/banking), Peter Howard, Jean Fontaine and Simon Richard (insolvency/litigation), Robert Hogan and Christian Meighen (tax) and Gregory Kane, Q.C., and Jeff Brown (regulatory); and assisted as to U.S. law, by David Falck, Douglas Ray and James Chudy (tax) of Pillsbury Winthrop LLP in New York.

JP Morgan Chase Bank, the administrative agent for the Microcell secured lenders, was represented by Blake, Cassels & Graydon LLP with a team led by Mike Harquail, James Papadimitriou and Chris Marshall (financial services), Susan Grundy, Milly Chow and Linc Rogers (insolvency), Leslie Morgan (tax), Sheila Murray, Jo Anne Matear and Mario Josipovic (securities), Michael Piaskoski (regulatory), Robert Torralbo and Sébastien Guy (litigation) and Rick Dawson, Tanya Sadlo, Iris Tam and Steve Wheeler (real estate).

The ad hoc committee of holders of Microcell unsecured notes was represented by Goodmans LLP, with a team that included Robert Chadwick, Brian Empey and Jessica Berry (insolvency), Tim Heeny, Celia Rhea, Gesta Abols and Alex Johnston (corporate/securities), Neil Harris and Alan Bowman (tax) and Michael Koch (regulatory), assisted by James Woods of Woods & Partners in Quebec; and in the U.S., by George Davitt and Yong-Nam Jun of Testa, Hurwitz & Thibeault, LLP in Boston.