========================================================================== ICG COMMUNICATIONS BANKRUPTCY NEWS Issue Number 1 -------------------------------------------------------------------------- Copyright 2000 (ISSN XXXX-XXXX) November 24, 2000 -------------------------------------------------------------------------- Bankruptcy Creditors' Service, Inc., Phone 609-392-0900 FAX 609-392-0040 -------------------------------------------------------------------------- ICG COMMUNICATIONS BANKRUPTCY NEWS is published by Bankruptcy Creditors' Service, Inc., 24 Perdicaris Place, Trenton, New Jersey 08618, on an ad hoc basis (generally every 10 to 20 days) as significant activity occurs in the Debtors' cases. Each issue is prepared by Peter A. Chapman, Editor. Subscription rate is US$45 per issue. Reproduction of ICG COMMUNICATIONS BANKRUPTCY NEWS is prohibited without permission. ========================================================================== IN THIS ISSUE ------------- [00000] HOW TO ORDER A SUBSCRIPTION TO ICG COMMUNICATIONS BANKRUPTCY NEWS [00001] BACKGROUND & DESCRIPTION OF ICG COMMUNICATIONS [00002] COMPANYS' CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 2000 [00003] COMPANY'S PRESS RELEASE CONCERNING CHAPTER 11 FILING [00004] ICG COMMUNICATIONS CHAPTER 11 DATABASE [00005] LIST OF ICG COMMUNICATIONS' 20 LARGEST UNSECURED CREDITORS [00006] DEBTORS' MOTION FOR APPROVAL OF $200,000,000 DIP FINANCING PACT [00007] U.S. TRUSTEE TO CONVENE ORGANIZATION MEETING TO FORM COMMITTEES KEY DATE CALENDAR ----------------- 11/14/00 Voluntary Petition Date 11/29/00 Deadline for filing Schedules of Assets and Liabilities 11/29/00 Deadline for filing Statement of Financial Affairs 11/29/00 Deadline for filing List of Leases and Executory Contracts 12/04/00 Deadline to provide Utility Companies with adequate assurance 12/15/01 Deadline to assume or reject leases and executory contracts 01/12/01 Deadline for removal of actions pursuant to F.R.B.P. 9027 03/14/01 Expiration of Debtors' Exclusive Period to propose a Plan 05/14/01 Expiration of Debtors' Exclusive Solicitation Period 11/14/01 Deadline for Debtors' Commencement of Avoidance Actions Organizational Meeting with UST to form Official Committees Bar Date for filing Proofs of Claim First Meeting of Creditors pursuant to 11 U.S.C. Sec. 341(a) Expiration of DIP Financing Facility -------------------------------------------------------------------------- [00000] HOW TO ORDER A SUBSCRIPTION TO ICG COMMUNICATIONS BANKRUPTCY NEWS -------------------------------------------------------------------------- ICG COMMUNICATIONS BANKRUPTCY NEWS is distributed to paying subscribers by electronic mail. New issues are published on an ad hoc basis as significant activity occurs (generally every 10 to 20 days) in the Debtors' cases. The subscription rate is $45 per issue. Newsletters are delivered via e-mail; invoices, transmitted with each newsletter issue, arrive by fax. Distribution to multiple individuals at the same firm is provided at no additional charge; folks outside of your firm should set-up and pay for their own subscriptions. Subscriptions may be canceled at any time without further obligation. To continue receiving ICG COMMUNICATIONS BANKRUPTCY NEWS, please complete the form below and return it by fax or e-mail to: Bankruptcy Creditors' Service, Inc. 24 Perdicaris Place Trenton, NJ 08618 Telephone (609) 392-0900 Fax (609) 392-0040 E-mail: peter@bankrupt.com We have published similar newsletters tracking billion-dollar insolvency proceedings since 1990. Currently, we provide similar coverage of the chapter 11 cases involving Wheeling-Pittsburgh, Safety-Kleen, Owens Corning, Fruit of the Loom, Pillowtex, The Loewen Group International, Inc., Harnischfeger Industries, Inc., Vencor, Inc., Sun Healthcare Group, Inc., Mariner Post-Acute & Mariner Health, Genesis Health Ventures, and Integrated Health Services. ========================================================================== [ ] YES! Please enter my personal subscription to ICG COMMUNICATIONS BANKRUPTCY NEWS. Name: ---------------------------------------------- Firm: ---------------------------------------------- Address: ---------------------------------------------- ---------------------------------------------- Phone: ---------------------------------------------- Fax: ---------------------------------------------- E-Mail: ---------------------------------------------- -------------------------------------------------------------------------- [00001] BACKGROUND & DESCRIPTION OF ICG COMMUNICATIONS -------------------------------------------------------------------------- ICG Communications, Inc. 161 Inverness Drive West Englewood, CO 80112 Telephone (303) 414-5643 http://www.icg.net ICG Communications, Inc. (NYSE:ICGX) is the publicly-traded parent company of ICG Funding, LLC, a special purpose Delaware limited liability company, ICG Holdings (Canada) Co., a Nova Scotia unlimited liability company, ICG Holdings, Inc., a Colorado corporation, and ICG Services, Inc., a Delaware corporation, and their subsidiaries. ICG Holdings' subsidiaries include ICG Telecom Group, Inc., which itself has as subsidiaries the other telecom-related debtor entities. The subsidiaries owned by ICG Services include ICG Equipment, ICG NetAhead, ICG Services, ICG Equipment, and ICG Mountain View, which are principally service companies. The telecom entities primarily provide services to customers and own the bulk of the network assets, which are in turn primarily leased from the service entities, and used by the telecom entities to facilitate their services to the ultimate customers. The Company is a facilities-based communications provider and local exchange carrier. The Company primarily offers voice and data communications services, including local, long distance and enhanced telephony, to small-to medium-sized business customers, and offers network facilities and data management to ISP customers. The Company also provides interexchange services, such as special access and switched access services, to long distance carriers and other customers. Today, ICG provides numerous products and services to its three major customer segments: internet service providers, small to medium-sized businesses, and long-distance carriers. The Company's data network includes: * 24 ATM data switches; * 18,000 miles of leased long-haul fiber optic lines; * 43 voice switches; * 4,767 miles of local fiber and connections to 9,152 buildings. The data network connects to major public peering connections located in Washington D.C., California, New Jersey, and Illinois and the local network covers approximately 30 metropolitan areas in California, Colorado, Ohio, Texas and the Southeast. The Company provides data access and transport services to ISPs that, in many cases, rely on the Company to provide network ownership and management. Current product offerings to the ISP market include dial-up products as well as broadband access services, including T-1 and T-3 connections and DSL. Dial-up products include: * Primary rate interfaces has been the traditional product that allows an ISP to connect to its customers using the Company's local access network; * Remote access services uses our switches and modem banks to provide access to our own switch locations for connection to an ISP, eliminating the need for the ISP to physically deploy modems at each of its points of presence; and * Internet remote access services combines access, transport and routing services to all Internet Protocol data packets either directly to the ISP or directly to the Internet, bypassing the ISP. The Company's voice and data communication services offered to business customers include local, long distance and enhanced telephony services through its Internet protocol, circuit switched and regional fiber optic networks. In regional markets, the Company is generally a less expensive alternative to the area's incumbent local telephone company for businesses. The Company also provides interexchange services to long-distance carriers and other customers, such as connecting end-users to long-distance carriers' facilities, connecting a long-distance carrier's facilities to the local telephone company's central office and connecting facilities of the same or different long distance carriers. In 1999, ICG sold the U.S. customer base of its Netcom subsidiary to MindSpring Enterprises, Inc., but retained the Netcom network backbone, which included 227 points of presence and served approximately 700 cities. In addition, ICG entered into a second agreement in which MindSpring agreed to utilize the data network and network management capabilities of ICG. In 2000, ICG signed multi-year agreements with a number of key ISPs to provide access, transport and network management services. ICG raised $750 million in new equity capital from investors that included affiliates of Liberty Media Corporation, Hicks, Muse, Tate & Furst Incorporated and Gleacher Capital Partners. This investment, combined with recent vendor financing, fully funded ICG's capital program for 2000. Recent partnerships include collaborating in field trials of VoDSL with Jetstream Communications and Covad Communications, providing DSL services with Covad and other DSL vendors, and a common share stock exchange with Teligent, Inc., a leader in fixed wireless broadband communications. ICG also continues to partner with key industry leaders, Lucent, Cisco and Nortel, in the expansion of ICG's nationwide voice and data network. The company also is developing products to take advantage of the new trend for businesses, ISPs and application service providers to outsource their network needs so they can focus on their core business. ICG Tevis, Inc., a subsidiary of the Company, purchased 1,000,000 shares of common stock of Teligent, Inc., a fixed wireless broadband communications provider, from a subsidiary of Teligent in exchange for 2,996,076 shares of ICG Common Stock. The value the Company assigned to the stock acquired was approximately $21.6 million. Long-term Leasing of Access Operating costs consist primarily of payments to long distance carriers for the use of network facilities to support local, special, switched access services and long distance services, as well as internal network operating costs, right of way fees and other operating costs. Internal network operating costs include the cost of engineering and operations personnel dedicated to the operations and maintenance of the network. During periods of rapid market expansion, backhaul and intracity facilities are leased on an interim basis until such time as owned facilities are in service, resulting in an increase of operating expenses as percent of revenue. During 2000, ICG incurred approximately $7 million associated with the advanced deployment of lines in expansion cities to accommodate customer requirements. The lines were provisioned using long-distance carrier capacity to meet customer demand. As ICG completes installation of switches in these markets, operating costs are expected to decline as the number of leased lines decreases and ICG earns revenue from terminating local traffic. Additionally, the increase in operating costs during the 2000 is due to the recognition of approximately $13.8 million of operating expenses for 2000 which in the first quarter had been offset against the deferred gain on the sale of NETCOM assets. ICG expects the ratio of operating costs to revenue will decrease as ICG provides a greater volume of higher margin services, carries more traffic on its own facilities rather than leased facilities, and obtains the right to use unbundled leased facilities on satisfactory terms, any or all of which may not occur. At the end of second quarter 2000, ICG had approximately 1.1 million access lines in service, including a record number 208,000 lines installed in second quarter alone. The company owns 4,767 fiber route miles and 67 switches. ICG has 3,000 full-time employees nationwide. In 2000, Qwest Communications Corporation ("Qwest") and the Company signed an agreement whereby the Company will provide, for $126.5 million over the initial six-year term of the agreement, an indefeasible right of use for designated portions of the Company's local fiber optic network. The Company will recognize revenue ratably over the term of the agreement, as the network capacity is available for use. The agreement was amended to include additional capacity for proceeds of $53.8 million to be received in installments through September 18, 2000. Qwest may, at its option, extend the initial term of the agreement for an additional four-year period and an additional 10-year period for incremental payment at the time of the option exercises. In the event that the Company fails to deliver any of the network capacity by March 31, 2001, Qwest is entitled to cancel any undelivered network capacity segments and receive immediate refund of any amounts already paid to the Company for such segments. In 1999, the Company signed a minimum ten-year agreement to lease certain portions of its fiber optic network to Qwest for $32.0 million, which was received, in full by the Company in June 1999. Approximately $2.3 million of the total proceeds received related to maintenance services remain in deferred revenue in the Company's consolidated balance sheet at June 30, 2000. Telecommunications and Line Purchase Commitments In 1998, the Company entered into two service agreements, with three-year terms, with WorldCom Network Services, Inc. Under the Telecom Services Agreement, WorldCom provides, at designated rates, switched telecommunications services and other related services to the Company, including termination services, toll-free origination, switched access, dedicated access, and travel card services. Under the Carrier Digital Services Agreement, WorldCom provides the Company, at designated rates, with the installation and operation of dedicated digital telecommunications interexchange services, local access, and other related services, which the Company believes expedites service availability to its customers. Both agreements require that the Company provide WorldCom with certain minimum monthly revenue which, if not met, would require payment by the Company for the difference between the minimum commitment and the actual monthly revenue. Additionally, both agreements limit the Company's ability to utilize vendors other than WorldCom for certain telecommunications services specified in the Agreements. Vendor Financing Agreements The Company formalized two vendor financing agreements with Cisco Systems, Inc. for financing of certain future capital expenditures during 2000. The two agreements will together provide $180.0 million in financing with a three year repayment term. As of June 30, 2000, $99.1 million was drawn under the facilities. The Company has entered into various equipment and line purchase agreements with certain of its vendors. Under these agreements, if the Company does not meet a minimum purchase level in any given year, the vendor may discontinue certain discounts, allowances and incentives otherwise provided to the Company. In addition, the agreements may be terminated by either the Company or the vendor upon prior written notice. Additionally, the Company has entered into certain commitments to purchase capital assets with an aggregate purchase price of approximately $272.3 million. Debt Structure The Company's debt structure, with amounts as of June 30, 2000, consists of: Senior Facility due on scheduled maturity dates, secured by substantially all of the assets of ICG Equipment and NetAhead ............................ $ 174,250,000 9 7/8% Senior discount notes of ICG Services ...... 308,439,000 10% Senior discount notes of ICG Services ......... 379,354,000 11 5/8% Senior discount notes of Holdings ......... 145,159,000 12 1/2% Senior discount notes of Holdings ......... 497,616,000 13 1/2% Senior discount notes of Holdings ......... 568,589,000 Mortgage loan payable with interest at 8 1/2%, due monthly into 2009, secured by building ........ 970,000 Mortgage loan payable with variable rate of interest (15.21% at June 30, 2000) due monthly into 2013, secured by corporate headquarters ...... 33,077,000 -------------- $2,107,454,000 Convertible Preferred Stock In 2000, the Company sold 75,000 shares of mandatorily redeemable 8% Series A-1, A-2 and A-3 Convertible Preferred Stock of ICG, and 10,000,000 warrants to purchase ICG Common Stock to affiliates of Liberty Media Corporation, Hicks, Muse, Tate & Furst Incorporated, and Gleacher Capital Partners. The sale of this Convertible Preferred Stock resulted in net proceeds to the Company of $707.7 million. Each share of 8% Series A Convertible Preferred Stock has an initial liquidation preference of $10,000 per share and bears a cumulative dividend rate of 8% per annum, compounded daily. Dividends accrete to the liquidation preference on a daily basis for five years and are thereafter payable in cash or additional liquidation preference. In the event of a change in control of the Company occurring prior to five years from the date of issuance of the Stock, the Company is, in most instances, required to make a special dividend payment to the Stockholders equal to the difference between the fully accreted liquidation preference of the Stock five years from the date of issuance and the existing liquidation preference on the date of the change in control. In addition, the Company has the right, but not the obligation, to offer to repurchase the Stock at 101% of the liquidation preference on the date of the change in control (after giving effect to the special dividend, if applicable). The 8% Series A Convertible Preferred Stock is immediately convertible into shares of ICG Common Stock at a conversion rate of $28.00 per share, subject to adjustment, and will have voting rights with the common stockholders on an as-converted basis. The holders of the Series A-1 and A-2 8% Series A Convertible Preferred Stock collectively will be entitled to elect up to three directors to the Company's Board of Directors. Additionally, certain material transactions outside the ordinary course of business will require an affirmative vote of at least one of the three directors elected by the holders of the Series A-1 and A-2 8% Series A Convertible Preferred Stock. The Company may redeem the 8% Series A Convertible Preferred Stock at any time after five years from the date of issuance through their mandatory redemption on June 15, 2015. The warrants to purchase ICG Common Stock are immediately convertible into shares of ICG Common Stock at a conversion rate of $34.00 per share and expire in five years from the date of issuance. The affiliates of Liberty Media, Hicks Muse and Gleacher Capital purchased $500.0 million, $230.0 million and $20.0 million, respectively, in 8% Series A Convertible Preferred Stock and received a ratable portion of the total 10,000,000 warrants. The value allocated to the warrants was $80.6 million at the time of the transaction. The number of registrants' outstanding common shares as of August 11, 2000 were 51,933,460, 31,931,588 and 1,918, respectively. ICG Canadian Acquisition, Inc., a wholly owned subsidiary of ICG Communications, Inc., owns all of the issued and outstanding common shares of ICG Holdings (Canada) Co. ICG Holdings (Canada) Co. owns all of the issued and outstanding shares of ICG Holdings, Inc. Debentures, and Preferred Stock of Subsidiaries The 11-5/8% Senior Discount Notes due 2007 issued by ICG Holdings, Inc., a wholly owned subsidiary of ICG Communications, Inc., during 1997 are guaranteed by ICG. The 12-1/2% Senior Discount Notes due 2006 and the 13- 1/2% Senior Discount Notes due 2005 issued by Holdings during 1996 and 1995, respectively, are guaranteed by ICG and Holdings-Canada. These debentures are publicly traded. ICG Services, Inc., a wholly owned subsidiary of ICG Communications, Inc., is the issuer of two series of publicly held debentures: 10% Senior Discount Notes due 2008, and 9-7/8% Senior Discount Notes due 2008. Both series of debentures are publicly traded. Accretion and preferred dividends on preferred securities of subsidiaries increased during 2000 to $17.1 million. The increase was due primarily to the periodic payment of dividends on the 14% Exchangeable Preferred Stock Mandatorily Redeemable in 2008 and the 14-1/4% Exchangeable Preferred Stock Mandatorily Redeemable 2009 in additional shares of 14% Preferred Stock and 14 1/4% of Preferred Stock. Accretion and preferred dividends on preferred securities of subsidiaries recorded during first quarter of 2000 consists of the accretion of issuance costs and the accrual of the preferred securities dividends associated with the 6 3/4% Exchangeable Limited Liability Company Preferred Securities Mandatorily Redeemable 2009, the 14% Preferred Stock and the 14 1/4% Preferred Stock. -------------------------------------------------------------------------- [00002] COMPANYS' CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 2000 -------------------------------------------------------------------------- ICG COMMUNICATIONS, INC. AND SUBSIDIARIES Consolidated Balance Sheet As of June 30,2000 Assets Current assets: Cash and cash equivalents $ 496,688,000 Short-term investments available for sale 31,283,000 Receivables: Trade, net of allowance of $31.6 million at June 30, 2000 192,611,000 Other 12,119,000 -------------- Total net receivables 204,730,000 Prepaid expenses, deposits and inventory 14,968,000 -------------- Total current assets 747,669,000 -------------- Property and equipment 2,363,160,000 Less accumulated depreciation (399,184,000) -------------- Net Property and equipment 1,963,976,000 -------------- Restricted cash 9,811,000 Investments 2,402,000 Other assets, net of accumulated amortization: Goodwill 80,190,000 Deferred financing costs 33,563,000 Other, net 20,498,000 -------------- 134,251,000 -------------- Total Assets 2,858,109,000 ============== Liabilities and Stockholders' Deficit Current liabilities: Accounts payable 36,547,000 Payable pursuant to IRU agreement) 84,516,000 Accrued liabilities 107,831,000 Deferred revenue 154,249,000 Current portion of capital lease obligations 49,676,000 Current portion of long-term debt 796,000 Current liabilities of discontinued operations 329,000 -------------- Total current liabilities 433,944,000 -------------- Capital Lease obligations, less current portion 127,088,000 Long-term debt, net of discount, less current portion 2,106,658,000 Other long-term liabilities 3,389,000 -------------- Total liabilities 2,671,079,000 -------------- Redeemable preferred stock of subsidiary 420,011,000 Company-obligated mandatorily redeemable preferred securities of subsidiary limited liability company which holds solely Company Preferred stock ($133.4 million liquidation value at June 30, 2000) 128,621,000 8% Series A Convertible Preferred Stock ($764.5 million liquidation value at June 30, 2000) 641,566,000 Stockholders' deficit: Common stock, $0.01 par value, 200,000,000 shares authorized; 48,909,665 shares issued and outstanding 489,000 Additional paid-in capital 858,169,000 Accumulated deficit (1,861,826,000) -------------- Total stockholders' deficit (1,003,168,000) -------------- Total liabilities and stockholders' deficit $2,858,109,000 ============== -------------------------------------------------------------------------- [00003] COMPANY'S PRESS RELEASE CONCERNING CHAPTER 11 FILING -------------------------------------------------------------------------- ENGLEWOOD, Colorado -- November 14, 2000 -- ICG Communications, Inc. (ICGX) and certain subsidiaries, announced today that it has filed voluntary petitions for Chapter 11 protection with the U.S. Bankruptcy Court for the District of Delaware. ICG is a telecommunications company and provider of network infrastructure, facilities and management. "This is a strategic step taken by the company as part of its on-going efforts to restructure and ultimately strengthen the company's balance sheet," said Randall E. Curran, chief executive officer, ICG. "We believe we'll be able to reposition ICG to be a profitable and competitive company well into the future." The company also announced it has secured a commitment for up to $350 million of new financing from Chase Manhattan Bank of which $200 million is available immediately. The remaining $150 million will be made available upon the satisfaction of certain conditions. ICG also has approximately $160 million cash on hand. "We believe that this liquidity is sufficient to continue to fund ICG's operations going forward to successfully complete our restructuring," said Curran. ICG will continue to maintain normal business operations for its nearly 10,000 customers nationwide providing all products and services in accordance with regulatory requirements. The company has taken this step with the full support of its major lenders and principal debt holders. "Our doors are open and it's business as usual," said William S. Beans Jr., chief operating officer and president of ICG. "Thanks to the diligent efforts of our employees and equipment vendors, we believe we have significantly improved our network performance related to our IRAS services and we are now focused on maintaining consistent high service levels for all our customers." -------------------------------------------------------------------------- [00004] ICG COMMUNICATIONS CHAPTER 11 DATABASE -------------------------------------------------------------------------- LEAD DEBTOR: ICG Communications, Inc. 161 Inverness Drive West Englewood, CO 80112 DEBTOR AFFILIATES FILING SEPARATE CHAPTER 11 PETITIONS: ICG Services, Inc. ICG Equipment, Inc. ICG Netahead, Inc. ICG Mountain View, Inc. ICG Canadian Acquisition, Inc. ICG Holdings (Canada) Co. ICG Holdings, Inc. ICG Telecom Group, Inc. NikoNet, LLC ICG Ohio Linx, Inc. ICG Enhanced Services, Inc. Communications Buying Group, Inc. ICG Telecom Group of Virginias, Inc. ICG Datachoice Network Services, L.L.C. Pit Harbor Bay, Inc. Bay Area Teleport, Inc. ICG Access Services - Southeast, Inc. Trans America Cable, Inc. ICG Telecom of San Diego, L.P. Western Plain Finance, L.L.C. ICG Choicecom Management, LLC ICG Choicecom, L.P. Downnorth, Inc. ICG Tevis, Inc. ICG Funding, LLC Chapter 11 Petition Date: November 14, 2000 Court: United States Bankruptcy Court District of Delaware Marine Midland Plaza Building 824 Market Street Wilmington, Delaware 19801 Bankruptcy Case Nos.: 00-04238 through 00-04263 Judge: The Honorable Sue L. Robinson Circuit: Third Debtors' Lead Counsel: Davis S. Kurtz, Esq. Skadden, Arps, Slate, Meagher & Flom (Illinois) 333 West Wacker Drive Chicago, Illinois 60606 Telephone: (312) 407-0700 Fax: (312) 407-0411 Gregg M. Galardi, Esq. Skadden, Arps, Slate, Meagher & Flom L.L.P. P. O. Box 636 Wilmington, DE 19899 Telephone: (302) 651-3000 U. S. Trustee: Daniel Astin, Assistant US Trustee Office of the United States Trustee Curtis Center, 9th Floor West 901 Walnut Street Philadelphia, PA 19106 Telephone: (215) 597-4411 Reported Financial Condition as of September 30, 2000: Debtor: ICG Communications, Inc. Total Assets: $ 2,789,927,050 Total Liabilities: $ 2,809,795,436 Debtor: ICG Funding, LLC Total Assets: $ 2,222,973 Total Debts : $ 5,813,243 Debtor: ICG Services, Inc. Total Assets: $ 1,506,016,836 Total Debts : $ 1,434,319,958 Debtor: ICG Holdings (Canada) Co. Total Assets: $ 256,013,821 Total Debts : $ 1,100,326,445 Debtor: ICG Holdings, Inc. Total Assets: $ 1,418,830,390 Total Debts : $ 2,442,015,952 -------------------------------------------------------------------------- [00005] LIST OF ICG COMMUNICATIONS' 20 LARGEST UNSECURED CREDITORS -------------------------------------------------------------------------- Creditor Nature of Debt Claim Amount -------- -------------- ------------ Wells Fargo Bank West, Nat'l Assoc., Corporate Trust and Escrow Services as Indenture Trustee for 13 1/2% Sen Discount Notes due 2005, issued by Intelcom Group (USA), Inc. MAC-CC7301-024 1740 Broadway Denver, CO 802744-8693 $ 594,160,062 Tel:(303) 863-6247 (Accreted amount as Fax:(303) 863-5645 public debt of Nov. 1, 2000 Wells Fargo Bank West, Nat'l Assoc., Corporate Trust and Escrow Services as Indenture Trustee for 12 1/2% Sen Discount Notes due 2006, issued by Intelcom Group (USA), Inc. MAC-CC7301-024 1740 Broadway Denver, CO 802744-8693 $ 517,925,851 Tel:(303) 863-6247 (Accreted amount as Fax:(303) 863-5645 public debt of Nov. 1, 2000 Wells Fargo Bank West, Nat'l Assoc., Corporate Trust and Escrow Services as Indenture Trustee for 10% Sen Discount Notes due 2008, issued by ICG Services, Inc. MAC-CC7301-024 1740 Broadway Denver, CO 802744-8693 $ 391,924,050 Tel:(303) 863-6247 (Accreted amount as Fax:(303) 863-5645 public debt of Nov. 1, 2000 Wells Fargo Bank West, Nat'l Assoc., Corporate Trust and Escrow Services as Indenture Trustee for 9 7/8 % Sen Discount Notes due 2008, issued by ICG Services, Inc. MAC-CC7301-024 1740 Broadway Denver, CO 802744-8693 $ 318,428,137 Tel:(303) 863-6247 (Accreted amount as Fax:(303) 863-5645 public debt of Nov. 1, 2000 Wells Fargo Bank West, Nat'l Assoc., Corporate Trust and Escrow Services as Indenture Trustee for 11 5/8% Sen Discount Notes due 2007, issued by ICG Holdings, Inc. MAC-CC7301-024 1740 Broadway Denver, CO 802744-8693 $ 150,718,480 Tel:(303) 863-6247 (Accreted amount as Fax:(303) 863-5645 public debt of Nov. 1, 2000 Qwest Communications 5555 17th Street Denver, Co 80202 Tel:(303) 291-1400 Fax:(303) 296-4295 trade $ 61,226,634 Lucent Technologies Inc 8400 E. Prentice Ave. Englewood, CO 80111 Tel:(303) 488-5000 Fax:(303) 714-0402 trade $ 42,050,551 UUNET 3060 Williams Dr. Fairfax, VA 22031 Tel:(703) 206-5600 Fax:(703) 206-5907 trade $ 32,529,315 Anixter Inc 4711 Golf Road Skokie, IL 60076 Tel:(847) 677-7700 Fax:(847) 715-7626 trade $ 27,389,304 Cisco Systems Inc. 170 W. Tasman San Jose, CA 95134 Tel:(408) 326-1941 Fax:(408) 527-2022 trade $ 17,973,564 Tellabs Operations Inc 4951 Indiana Ave. Lisle, IL 60532 Tel:(630) 493-9786 Fax:(630) 852-7346 trade $ 15,375,859 Cisco Capital Leasing 170 W. Tasman San Jose, CA 95134 Tel:(408) 326-1941 Fax:(408) 527-2022 trade $ 14,029,488 Telcordia Technologies 8 Corporate Place PYA-2N343 Piscataway, NJ 08854 Tel:(858) 826-3060 Fax:(858) 826-5617 trade $ 7,172,157 Teng Construction LLC 205 N. Michigan Ave. Chicago, IL 60601 Tel:(312) 795-0763 Fax:(312) 616-6069 trade $ 7,144,479 Northern Telecom (Nortel Networks Inc) 2221 Lakeside Blvd 12th Floor Mail Stop: 99I/12/B60 Richardson, TX 75082 Tel:(972) 684-1000 Fax:(972) 685-3504 trade $ 5,699,951 MA Mortenson Co. 1112 Oakridge Dr. Suite #104-227 Ft. Collins, CO 80525 Tel:(303) 295-2511 Fax:(970) 223-5418 trade $ 4,463,535 Power & Telephone Supply Company 2673 Yale Ave. Memphis, TN 38112 Tel:(901) 324-6116 Fax:(901) 320-3082 trade $ 4,141,156 Predictive Systems Inc. 1121 Pacific Ave. Santa Cruz, CA 95060 Tel:(831) 460-3100 Fax:(831) 460-3199 trade $ 3,632,447 Sun Microsystems, Inc. 901 San Antonio Rd. Palo Alto, CA 94303 Tel:(650) 960-1300 Fax:(650) 960-4234 trade $ 2,991,951 Velcor 2258 Swetzer Rd. Penryn, CA 95663 Tel:(916) 428-0286 Fax:(916) 663-4499 trade $ 2,609,200 ------------------------------------------------------------------------- [00006] DEBTORS' MOTION FOR APPROVAL OF $200,000,000 DIP FINANCING PACT ------------------------------------------------------------------------- ICG Communications and its affiliates presented Judge Sue L. Robinson with a First Day Motion seeking interim authority for ICG NetAhead, Inc., and ICG Equipment to use cash collateral previously pledged to secure the repayment of certain loans. Prior to the commencement of these Chapter 11 cases, David S. Kurtz, Esq., and Timothy Pohl, Esq., of Skadden, Arps in Chicago, explained to Judge Robinson, the Debtors' pre-petition liabilities fell into three categories: (A) a secured note governed by a credit agreement; (B) mortgage obligations; and (C) senior discount notes issued by ICG Services and ICG Holdings. Prior to the Petition Date, the Debtors entered into a $200,000,000 Credit Agreement with a consortium of Banks, for which Royal Bank of Canada is administrative agent and collateral agent, Morgan Stanley Senior Funding, Inc., is the sole book runner and lead arranger, and Bank of America, N.A., and Barclays Bank Plc are co-documentation agents. Under this Agreement, the lenders loaned money to, and issued letters of credit for the account of, the service operating debtors consisting of ICG Equipment, ICG NetAhead, and ICG Services. This indebtedness was secured by a lien against the property of Equipment and NetAhead to the Agent, for the ratable benefit of the lenders, in: (a) all of the Debtors' equipment, inventory, receivables, and contracts; (b) all pledged shares, pledged debt, all additional shares of stock acquired by, and all additional indebtedness owed to, the Debtors; (c) all other investment property (including all securities, whether certificated or uncertificated, security entitlements, securities accounts, commodity contracts, and commodity accounts); (d) the Debtors' rights in specified agreements, additional lease agreements, and all other agreements relating to any such agreements, including any rights of the Debtors to receive moneys or proceeds due under these agreements, claims of the Debtors which have or might arise from the breach of these agreements, and the right of the Debtors to perform, terminate, or exercise remedies available under such agreements; (e) Account collateral, including (i) the Cash Collateral Account, (ii) the Letter of Credit Cash Collateral Account, (iii) all pledged accounts, (iv) all other deposit accounts of the Debtors, (v) all Collateral Investments, (vi) all notes, certificates of deposit, deposit accounts checks, and other instruments from time to time possessed by the Collateral Agent, and (vii) all interest, dividends, cash, instruments, and other property from time to time received, receivable, or otherwise distributed in respect to or in exchange for any or all of the then existing Account Collateral; and (f) the Intellectual Property Collateral (including Patents, Trademarks, Copyrights, Trade Secrets, Computer Software, Licenses, and any and all claims for damages for past, present and future infringement, misappropriation, or breach in respect of the Patents, Trademarks, Copyrights, Trade Secrets, Computer Software, and Licenses. As of the commencement of these Chapter 11 cases, the Debtors' principal secured liabilities consisted of: (1) $85 million of senior secured debt outstanding under a loan facility provided to ICG NetAhead and ICG Equipment, and guaranteed by ICG Services; (2) the 9-7/8 senior discount notes issued by ICG Services, with an accreted value, as of November 1, 2000, of approximately $318,428,137; (3) the 10% senior discount notes issued by ICG Services, with an accreted value as of November 1, 2000, of approximately $391,924,050; (4) the 11-5/8% senior discount notes issued by ICG Holdings, with an accreted value as of November 1, 2000, of $150,718,480; (5) the 12-1/2% senior discount notes issued by ICG Holdings, with an accreted value as of November 1, 2000, of approximately $517,925,851; and (6) the 13-1/2% senior discount notes issued by ICG Holdings, with an accreted value as of November 1, 2000, of approximately $594,160,162. The Debtors advised the Court that, prior to the commencement of the Chapter 11 proceedings, they were expanding their network facilities, resulting in the incurrence of significant costs and obligations, as well as certain operational difficulties associated with the deployment of new technology. While in the midst of this expansion, the Debtors allege in their Motion that the availability of funds from the capital markets for the telecommunications industry generally became constricted, resulting in the Debtors being unable to fund the completion of their ongoing network expansion. As a result, the Debtors' balance sheet is significantly over- leveraged relative to their existing operations, requiring a financial restructuring that the Debtors concluded could best be achieved through the chapter 11 process. The Debtors requested that the Court consider and approve a Stipulation among the Debtors and the Lenders which included the following operating restrictions and payment requirements: (a) Use of the Debtors' cash flow from operations would be restricted by certain budget terms governing such items as levels of EBITDA, and limiting expenditures for such items as professional fees, capital lease interest expenses, CAPEX expenditures, payments for releases of mechanics' liens and line deposits, changes in accounts receivables, and decreases in post-petition equipment leases, so as to provide net increases in cash used in operations steadily from June of 2001 through December of 2001; (b) ICG Equipment, NetAhead, and ICG Services will pay to the Agent, for the ratable benefit of all of the Lenders, all accrued and unpaid pre- and post-petition interest and expenses under the Credit Agreement on a monthly basis to protect the lenders from any decrease in the value of the Debtors' interest in the encumbered property; (c) Equipment, NetAhead, and Services will grant to the Agent, for the ratable benefit of all of the Lenders, valid, perfected, first-priority postpetition security interests in and liens upon all of the property of Equipment, NetAhead, and Services acquired after the Petition Date that is not otherwise subject to any lien or security interest, to the extent there is any diminution in the value of the Pre-petition Collateral; (d) The Agent, for the ratable benefit of the Lenders, will receive an administrative claim to the extent there is any diminution in the value of the pre-petition collateral such that the value of this collateral is less than the total of the pre-petition obligations; and (e) The Debtors will pay, upon writer request, all unpaid out-of- pocket costs and expenses of the Agent and the Lenders (including, without limitation, reasonable attorneys' fees and expenses and the fees and expenses of Deloitte & Touche) incurred (whether before or after the Petition Date) in connection with matters relating to the Credit Agreement, the Prepetition Collateral, the After-Acquired Collateral, monitoring of the bankruptcy cases and the enforcement of any rights and remedies in connection with those cases. In addition, the Debtors have undertaken to provide post-petition reporting as follows: (a) Within 45 days after the end of each fiscal quarter, the Debtors will provide to the Agent financial and operational reports consisting of quarterly consolidated and consolidating balance sheets, income statements, and statements of cash flow of Services and its subsidiaries, and ICG Communications and its subsidiaries, certified by the applicable chief financial officer, and certificates as to compliance with the loan documents; (b) Within 25 days after the end of each calendar month, the Debtors will provide to the Agent (i) monthly consolidated and consolidating balance sheets and divisional operation results of Services and its subsidiaries, and ICG Communications and its subsidiaries, (ii) a monthly comparison of actual expenses of the prior month to those set out in the budget for such month, (iii) monthly statements of accounts of cash and cash equivalents, and (iv) a monthly report on the status of those contracts between Services and any of its affiliates and their respective customers, as well as those leases or other contracts between Holdings or ICG Telecom, and any of NetAhead, Equipment, or Services, each certified by Services' chief financial officer (but which need not include a GAAP certification); (c) Within 90 days after the end of each fiscal year with respect to Communications and its subsidiaries, and Services and its subsidiaries, the Debtors will furnish the Agent audited financial statements and annual consolidating financial statements; (d) No later than the end of each fiscal year, the annual business plan of Communications and its subsidiaries (or, promptly following distribution to any third party, any similar or revised business or restructuring plan prepared by or on behalf of the Debtors, or any Debtor, including any such plan prepared in connection with the Chapter 11 cases), and furnish forecasts prepared by management of Services, in each case in form and detail satisfactory to the Agent, of balance sheets, income statements and cash flow statements on a monthly basis for the next 12 months, until the scheduled final maturity of the DIP facility; (e) On a weekly basis, updated, rolling 13-week cash flow forecasts for the Debtors and their subsidiaries; and (f) Promptly after request, all other business and financial information that any lender, through the Agent, may from time to time reasonably request, including without limitation reports regarding variances from the Budget, long-haul backbone usage by Holdings and its subsidiaries, use of data ports, customers added and disconnected, circuits added and discontinued, information regarding individual customers and vendors, and changes relating to key employees. In addition, the Debtors will provide reasonable access to the Agent to examine the Debtors' books and records to determine the value of the pre- petition collateral as of the Petition Date, and thereafter; and the Debtors will use their reasonable best efforts to obtain and provide to the Agent and the Lenders copies of any field examination and third-party appraisals of the Debtors' equipment and inventory prepared in connection with any proposed postpetition financing to be provided to the Debtors or otherwise, and, in the event the Prepetition Obligations have not been indefeasibly paid in full, in cash, on or before March 1, 2001, to obtain and provide to the Agent, upon written request, within 60 days of such notice, a field examination and a third-party appraisal of the Debtors' equipment and inventory, with updates provided at such times as are reasonably requested by the Agent, but no less frequently than quarterly. The Agent and Lenders will be deemed to have waived their right to collect interest at the default rate of 2% per annum above the rate per annum otherwise payable under the Credit Agreement, but only so long as the Debtors make all payments required under, and otherwise remain in compliance with, all of the provisions of the post-petition collateral agreements and the Court's Order approving the same. In the event that the Debtors fail to comply with the budget, or if the Debtors fail to timely make any payment required by the post-petition collateral agreements and the Court's Order approving the same, the Debtors' right to use cash collateral will terminate five days after receipt of written notice to the attorneys for the Debtors given by the Pre-petition Agent, and the Debtors shall be deemed to have consented to an expedited hearing on a motion by the Agent, and/or any Lender, seeking relief from the automatic stay and/or additional adequate protection. In that connection, the Lenders and the Agent have retained the right to seek further adequate protection at any time. Absent the Agent's prior written consent, or until payment of the Prepetition Obligations in full in cash, the Debtor may not seek any order which authorizes the obtaining of credit or the incurring of indebtedness or any other obligation that is secured by a security, mortgage, or collateral interest or other lien on all or any portion of the pre-petition collateral or the after-acquired collateral which is equal or senior to the liens and security interests held by the Agent, or the enforcement of any claimed security, mortgage or collateral interest or other lien of any person other than of the Agent on all or any portion of the prepetition collateral (other than the enforcement of a lien on property that was, as of the Petition Date, a valid and perfected lien, or a lien which constitutes a permitted subsequently perfected lien, but in either case, only to the extent of having priority over the liens securing the prepetition obligations. The terms of the agreement and the Court's Order survive entry of any order confirming the plan, or any conversion of the cases to liquidation cases under Chapter 7. Finding that the Debtors have an immediate need for access to previously encumbered cash collateral to continue in business that the Lenders are satisfied that their interests are adequately protected, Judge Robinson entered an Interim Order approving the request on the terms described above, directed that the Debtor give notice of the terms of the agreement and Order to parties-in-interest, and scheduling a final hearing on the Debtors' request for December 12, 2000, at 4:00 p.m. in Wilmington. -------------------------------------------------------------------------- [00007] U.S. TRUSTEE TO CONVENE ORGANIZATION MEETING TO FORM COMMITTEES -------------------------------------------------------------------------- On November 29, 2000, at 10:00 a.m., the United States Trustee for Region III will convene an organizational meeting for the purpose of forming one or more official committees of the Debtors' creditors. A location has not been selected; the meeting may be held in Philadelphia or Wilmington. Each of the 20 largest unsecured creditors will receive an invitation to that meeting directly from the Office of the U.S. Trustee. Ordinarily, the U.S. Trustee for Region III appoints one official committee of unsecured creditors and appoints the 7 largest debtholders willing to serve on that single committee. Daniel K. Astin, Esq., is the attorney for the U.S. Trustee in charge of ICG's Chapter 11 cases. Contact the Office of the U.S. Trustee at 215-597- 4411 for additional details about the time, date and place for the organizational meeting. *** End of Issue No. 1 *** ------------------------------------------------------------------------- Peter A. Chapman peter@bankrupt.com http://bankrupt.com ------------------------------------------------------------------------- Recommended Reading: "Kirby Benedict: Frontier Federal Judge" -- history and a biography by Aurora Hunt. Order your copy of this title today at http://www.amazon.com/exec/obidos/ASIN/1893122808/internetbankrupt -------------------------------------------------------------------------