New York-based Fortress Investment Group and Greenhill Capital Partners LLP are committing a total $205 million to buy Pinnacle's delinquent 10% senior discount notes. Pinnacle is $200 million in debt. The deal can't go through without the approval of a federal bankruptcy court judge.
The bankruptcy petition will be filed in Delaware. The parties have signed a definitive agreement to go through with the deal with court approval.
In exchange for the $205 million buyout, Fortress and Greenhill will create a new Pinnacle company headed by Wesley R. Edens, chairman/CEO of Fortress and Robert H. Niehaus, chairman of Greenhill. Edens will chair the new Pinnacle; Niehaus be vice chairman.
Besides the $205 million equity investment, the bankruptcy reorganization plan will have a new credit facility of up to $340 million led by a syndicate arranged by Deutsche Bank Securities Inc. and Bank of America.
Fortress will buy up to 13.74 million shares of New Pinnacle common; Greenhill will purchase up to 6.77 million shares of the stock. The purchase contract also calls for the cancellation of Pinnacle's 5 ½% convertible subordinated notes due 2007. The senior notes are due 2008.
Former stockholders and plaintiffs in a stockholder class action lawsuit will receive five-year warrants to buy up to 102,000 shares of New Pinnacle common, representing about ½% of New Pinnacle's equity capitalization.
Trade and other creditors will be paid in full over a period to be approved by the court, according to Pinnacle's statement.
None of the parties could be reached at GlobeSt.com's publication deadline. But in the statement, Steve Day, Pinnacle's CEO, says he expects the Chapter 11 plan to be approved by the court "relatively quickly." He says "our trade creditors and customers will be unaffected by the reorganization and that was important to us."
If Pinnacle changes its mind and goes with another reorganization plan and with other investors, Fortress and Greenhill will be paid a $12 million termination fee, Pinnacle's statement says.
Pinnacle says it owned, managed, leased or had rights to 4,000 cell phone sites on Dec. 31, 2001 in the United States and Canada.
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