It seems the financial picture of Hawaiian Telcom has darkened considerably.Especially since they’ve decided to defer 26 million dollars in interest payments due on November 1st, 2008 for a month.Yes, they have a month grace period contractually to pay this interest installment.But they only have 80 million of cash on hand.
None of this bodes well for the immediate financial health of Hawaiian Telcom. According to the Hawaiian Telcom 8K filing if Hawaiian Telcom fails to pay this interest payment after the 30 day grace period it will cause their house of cards to collapse.In other words, any default by Hawaiian Telcom would speed up the maturity of these bonds. Thus consequently making them immediately due and payable.
“Failure to make the interest payments within the 30-day grace period would constitute an event of default under the indentures governing the notes that would permit the indenture trustee or holders of 25% or more of any class of notes to accelerate the maturit of such notes and cause them to be immediately due and payable. In addition, such failure would constitute an event of default under the Company’s credit facility that would permit the administrative agent or lenders holding in excess of 50% of the indebtedness outstanding under the credit facility to accelerate the maturity of the indebtedness outstanding.”
In a nutshell, it wouldn’t surprise me that Hawaiian Telcom will have to file for bankruptcy as early as December 2008 . Their over leveraged balance sheet has unfortunately finally caught up to them.
What happens if HITel goes under? Does the state, thus we the taxpayers, have to bail them out to continue essential services?
How many, like myself, have never seen any reason to install a land line, opting for a cell phone as my only phone?
Interesting to watch this one.
Very interesting. Sorry to hear they are having difficulty.
Aloha,
Keahi
I’m an employee of Hawaiian Telcom. I understand how many people choose not to have a landline because even I don’t need one. I do however depend heavily on my cell phone. Many people don’t know this but many cell phone service providers rely on Hawaiian Telcom. They use Hawaiian Telcom’s landlines to connect their cell sites. Oceanic Time Warner as well as Pacific Light Net actually use our lines too. T1 lines that they provide often come from us.