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Hawaiian Telcom files for bankruptcy protection

(Agencies)
Updated: 2008-12-02 10:38

HONOLULU -- Hawaiian Telcom Communications Inc., the largest telephone company in Hawaii, said Monday that it had filed for bankruptcy protection.

Brand logo of Hawaiian Telcom Communications Inc. is seen in this undated photo from Flickr.com.

The company had been working with creditors since October on a debt-restructuring agreement and said it decided the Chapter 11 bankruptcy-protection filing was the best course of action. It blamed the filing partly on increased competition, economic volatility and its failure to meet capital expenditure needs.

President and Chief Executive Eric Yeaman, in a letter to customers Monday, stressed that the company was not going out of business and that service would not be interrupted.

Hawaiian Telcom posted a loss of $34 million in the third quarter, its third straight quarterly loss this year. Last month the company filed documents with the Securities and Exchange Commission stating that it may seek court protection if talks with creditors failed.

Hawaiian Telcom postponed a $26 million interest payment in November and was in the midst of a 30-day grace period, which ended Monday. Hawaiian Telecom is carrying more than $1 billion in debt.

Hawaiian Telcom said it is seeking approval from the US Bankruptcy Court for the District of Delaware to use cash on hand to finance its operations.

The company said it has adequate liquidity to support near-term operating expenses. It had about $75 million in available cash as of Sunday, which will be used to pay workers' salaries, customer programs, vendors and suppliers and to finance overall operations.

The 125-year-old company once provided one of the few ways to communicate from these isolated islands to the rest of the world.

Hawaiian Telcom, which employs about 1,400 workers, served about 524,000 residential and business phone lines at the end of September.

Gov. Linda Lingle said the Public Utilities Commission, which has regulatory oversight over the utility, has been closely monitoring the company's financial circumstances.