Otelco, after its loss of the Time Warner Cable contract, had filed for Chapter 11 bankruptcy. The decision was reached it had lost a key contract from Time Warner Cable Inc three months ago.
Last February, Otelco was able to reach an agreement with its senior lenders to extend the terms of its financing agreements in order to lower the company's overall debt and raise its capital structure. This was achieved through a 'prepackaged' Chapter 11 filing, which is essentially a negotiated agreement with the general terms of a bankruptcy plan with its creditors prior to the filing for bankruptcy.
Time Warner had not renewed its wholesale voice contract and this revenue stream accounted for 12.3% of total revenue for the company amounting to US$74.4 million for the nine months to September 30, 2012. The whole contract would expire by December 31.
With bankruptcy protection, Otelco estimates its EBITDA would be between US$28 million and US$32 million for 2014 due to the loss of the contract.
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