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Classic Edges Away from Bankruptcy

11/22/2002 7:59 AM Eastern

Classic Communications Inc. edged closer to emerging from Chapter 11 after a
U.S. Bankruptcy Court judge in Delaware approved a disclosure statement
regarding an amended reorganization plan put forward by its secured and
unsecured creditors.

The plan -- submitted Nov. 8 and set for overall creditor approval Dec. 17 --
would pump an additional $110 million in cash into the troubled MSO, while
giving bondholders the majority of equity in a newly formed company.

U.S. Bankruptcy Court Judge Peter J. Walsh approved the disclosure statement
for the amended reorganization plan Nov. 12, scheduling a Dec. 17 hearing for
confirmation.

Objections to the plan must be made by Dec. 11. If no objections are made,
Classic will emerge from what has been a yearlong ordeal.

Classic first filed for Chapter 11 protection in November 2001, citing assets
of $711.3 million and liabilities of $641.8 million. The company had been
operating under $30 million of debtor-in-possession financing, but it has been
losing subscribers since it filed for bankruptcy protection.

The amended plan is similar to one submitted by Classic's unsecured creditors
in August. That plan called for a $20 million loan, a $100 million term facility
and a debt-for equity swap that would give Classic's bondholders -- owed $406
million -- 100 percent equity in a newly constituted company.

The approved plan calls for an $20 million revolving-credit facility and $90
million in new notes. Bondholders would receive about 1 million shares of new
equity in Classic, or about 52 percent of outstanding shares in the new
company.

The plan values Classic at between $300 million and $360 million.

According to its 10-Q quarterly report, filed Nov. 14, Classic had about
325,000 subscribers as of Sept. 30 -- some 25,000 fewer than in the year-ago
period.

Third-quarter revenue was up $500,000 to $44.9 million, while free cash flow
rose to $5.6 million compared with negative free cash flow of $6.5 million in
the prior year.

September