WORLDSPACE(R) Inc. Achieves Agreement to Defer Debt Payment
SILVER SPRING, Md., Jun 04, 2008
Worldspace WRSP 1.69, +0.12, +7.6%, one of the world leaders in satellite-based digital radio services, announced that on June 3, 2008, it entered into letter agreements with each of the four holders of the Company's secured notes dated as of June 1, 2007 (the "Bridge Loan Notes") and Amended and Restated Convertible Notes dated as of June 1, 2007 (the "Convertible Notes"). Under the terms of the agreement, the note holders have agreed to defer until June 30, 2008 the Company's obligation to pay $17.7 million in principal amount of the Bridge Loan Notes plus accrued but unpaid interest due on the Bridge Loan Notes and Convertible Notes, and to forbear exercising their rights and remedies with respect to the payment default.
"I am pleased we have been able to reach agreement with our existing note holders to defer the payment, said Noah A. Samara, Chairman and CEO, WORLDSPACE, Inc. "This agreement gives the Company time to bring in the funds already committed to it and to raise new funding. While the agreement accelerates payment of the remaining outstanding amount of the Bridge Loan Notes and the Convertible Notes, such accelerated pay down of the Notes this year will remove capital structure restrictions, which would have otherwise remained until June 2010. Our cash needs are challenging, but we are working very hard to address this in order to take full advantage of the milestones we have achieved in Europe, including licenses from Germany and Switzerland, and successful on-the-ground testing of our service in Italy, where we expect to launch Europe's first satellite radio service as early as 2009."
In addition, the Company and the note holders have agreed to the following modifications to the existing debt arrangements between them:
-- The remaining unpaid principal amount of the Bridge Loan Notes including all accrued and unpaid interest thereon will be paid in full on or before July 31, 2008.
-- The Convertible Notes will be convertible into shares of Class A Common Stock at a conversion price of $2.00 per share (reduced from $4.25 per share). In addition, all of the outstanding Convertible Notes will be repaid in full on September 30, 2008 or such earlier date as elected by the Company, and the Company will also pay a prepayment fee equal to 1.5% of such outstanding principal and interest on such Convertible Notes. The Company's obligations with respect to the Convertible Notes will be secured by a first priority security interest in the assets of the Company. The Company has agreed not to grant a lien on its assets with respect to any indebtedness other than the Bridge Loan Notes and the Convertible Notes while such Bridge Loan Notes and Convertible Notes are outstanding.
-- Each of the note holders will receive a pro rata portion of an aggregate of five (5) million in new Company warrants exercisable for shares of the Class A Common Stock of the Company (the "New Warrants"). The New Warrants will be exercisable at $1.55 per share, and will be exercisable for a five (5) year period from the date of issuance.
The Company has agreed to enter into definitive documentation with respect to the foregoing terms on or before June 15, 2008.
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