Call-Net Completes Restructuring

Toronto-based Call-Net Enterprises Inc. successfully completed a capital restructuring by way of a court-approved plan of arrangement pursuant to the Canada Business Corporations Act on April 10, 2002. The plan was approved by its shareholders and noteholders on April 3 and by the Superior Court of Justice on April 5.
Pursuant to the plan, approximately $2.6 billion of unsecured notes were cancelled and replaced with a package of consideration consisting of US$377 million of new 10.625 per cent secured notes, 80 per cent of the equity in the restructured Call-Net and cash consideration of approximately US$81.9 million. Existing shareholders received 20 per cent of the equity in the restructured Call-Net.
In conjunction with the plan, Call-Net also entered into a new 10-year branding and technology services agreement with Westwood, Kansas-based Sprint Communications Company LP. On April 17, 2002, Sprint subscribed for new class B non-voting shares, representing 5 per cent of Call-Net’s post-plan of arrangement equity, for $25 million.
Representing Call-Net in-house was senior vice-president, chief legal counsel and corporate secretary George Malysheff; assisted by Stikeman Elliott with a team that included Sean Dunphy, Kieran O’Donnell, Mihkel Voore, Ron Ferguson, Melissa Ross, D’Arcy Nordick, Abas Kanu, Jason Wilson and Zahir Manek (corporate), Timothy Banks (litigation) and Kevin Kelly (tax) in connection with the plan and the Sprint private placement. Michael Stamer, Bruce Mendelsohn, Paul Belvin, Chris Gores and Michael Seaman of Akin Gump Strauss Hauer & Feld LLP acted as Call-Net’s U.S. counsel. Jeff Barnes and Leslie Johnson of Fraser Milner Casgrain LLP acted generally as corporate counsel to Call-Net and in connection with the Sprint branding and technology services agreement.
Representing certain of the noteholders were Chaim Fortgang on U.S. matters, and a team from Davies Ward Phillips & Vineberg LLP including Jay Swartz in Toronto, and Mark Connelly and Josh Wanderer (tax) in New York. Dale Lastman, Celia Rhea, Bob Vaux and Keren Groll (corporate) and Jay Carfagnini (corporate restructuring) of Goodmans LLP acted for the independent directors. Rosalind Morrow, Matthew Campbell (corporate) and Terrance Sweeney (tax) of Borden Ladner Gervais LLP acted for Sprint, assisting in-house counsel Charles Wunsch, assistant vice-president, law and corporate transactions, and Brett Haring, senior attorney.