CEDAR RAPIDS, Iowa — McLeodUSA Inc. emerged from bankruptcy Wednesday and planned to issue $670 million in cash to its senior noteholders, as well as preferred stock and warrants to purchase new common stock.
Stock will begin trading Thursday on the Nasdaq Stock Market, the company said.
McLeod filed for Chapter 11 protection in January. The U.S. Bankruptcy Court in Delaware approved the reorganization plan on April 5.
As part of the plan, McLeodUSA sold its directory publishing business to Yell Group Ltd. for $600 million. It got another influx of cash — $175 million from Forstmann Little & Co. — in exchange for stock, and obtained a $110 million line of credit from a banking syndicate led by Morgan Chase.
McLeodUSA delayed distribution of common stock until investor lawsuits seeking more than $300 million are resolved or the court establishes a reserve to cover any entitlement.
The court will hear a company motion April 29 that would set the reserve at zero. The company also has proposed an alternative plan that would set aside 1.5 million to 4.6 million shares.
The company's reorganization plan calls for the distribution of nearly 54.8 million shares of common stock.
Telephone messages left Wednesday for McLeodUSA spokesman Bruce Tiemann and industry analysts were not immediately returned.
McLeodUSA lost nearly $2.8 billion in the year ended Dec. 31, according to its annual report filed Monday with the Securities and Exchange Commission.
The company's reorganization plan eliminates $3 billion in debt.
McLeodUSA provides communication services, including local phone service, to customers in 25 states: Iowa, Ohio, Texas, Montana, Arizona, Indiana, Oklahoma, Minnesota, Wyoming, New Mexico, Illinois, Kansas, North Dakota, South Dakota, Colorado, Washington, Oregon, Utah, Missouri, Michigan, Wisconsin, Arkansas, Nebraska, Idaho and Louisiana.