Cable operator RCN emerged aggressively from bankruptcy Wednesday, announcing at the same time its completion of the purchase of of the 50% it didn't own of Starpower, which provides cable, internet and phone service in Washington, D.C.
RCN launched the Washington cable overbuild with utility Pepco Holdings some seven years ago, but Pepco had been looking to get out of the partnership.
Under the New York bankruptcy court-ordered reorganization, RCN gets to convert $1.2 billion in debt to new equity and eliminate another $1.8 billion thanks to an infusion of $330 million from Deutsche Bank's Cayman Islands Branch and another $125 million, apparently from existing investors banking on a turn-around. Specifically, RCN said that it had "issued $125 million of convertible second-lien notes to certain investors and holders of the company's pre-petition bond obligations."
That money is going to pay a syndicate of lenders led by JPMorgan Chase.Pepco had paid $141 million for its share of Starpower, which had only managed to collect about 41,000 customers in its seven years. RCN wasn't saying how much it had paid for the 50% stake.