Deal of the Week: ATLANTIC TELECOM

Lathams and Ashursts scoop first UK telecoms insolvency

Latham & Watkins and Ashurst Morris Crisp are advising PricewaterhouseCoopers (PwC) on the first-ever administration of a UK-quoted telecoms company.
Atlantic Telecom was put into administration last week, following US bondholders' rejection of the company's plans for potential restructuring.
In December last year, Cadwalader Wickersham & Taft, led by Andrew Wilkinson and Yvette Croucher, pitched and won the role as Atlantic Telecom's adviser for the restructuring work. The firm worked alongside the company's longstanding corporate adviser Ashursts.
The company's bondholders set up a committee to represent their interests, bringing in Lathams and PwC to advise.
When Atlantic Telecom was declared insolvent and put into administration, PwC was appointed as administrator because of its previous role as adviser to the bondholders. Cadwalader was replaced by a Lathams team led by Kevin Dunn as Atlantic Telecom's adviser on the back of its relationship with PwC.
PwC hopes that the business can be sold as a going concern and a number of financial buyers are known to be interested in at least some, if not all, of Atlantic Telecom's assets. It is expected that the price would generate enough to meet the debts of the crippled telecoms operator, which are estimated at £300m.
PwC joint administrator Steven Pearson said that last week was spent trying to stabilise the company, which is now close to an even keel. The deadline for bidders was last Friday (19 October).
Pearson said: “Ideally, we're looking to see the bulk of the operations go to one buyer.”

“The firms that will do best here are those firms that have a strong European presence”
Giles Boothman, Ashursts

But Atlantic Telecom faces a second setback. The company's German subsidiary relies on its parent company for funding and is, therefore, also seeking insolvency protection.
Atlantic Telecom has a longstanding relationship with Ashursts, but it brought in Cadwalader to advise on the restructuring because its high-yield bonds are governed by New York law.
Ashursts was retained after the administration because of its knowledge of the company. It is handling the due diligence work, as well as advising on various specialist areas, including litigation.
Ashursts' lead partner on the deal Giles Boothman said that restructurings involving high-yield notes are becoming an increasingly active area. “I think that the firms that will do best here are those firms that have a strong European presence and a strong background in corporate and banking,” he said.
He claims that Ashursts is ideally placed. It advised Ernst & Young as administrator to the Finelist Group on the largest insolvency in 1999, which involved 5,500 employees and 650 sites. This year, it advised the trustee for the high-yield bonds in the RSL Communications insolvency, which involved debts amounting to £1.4bn.
Atlantic Telecom was founded in 1988. It specialises primarily in Lucent and Nortel equipment and buys, sells and refurbishes telephone systems and equipment.