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Key3Media Shows to Continue: Recapitalization Would Eliminate 87% of Debt

Tuesday, February 04, 2003

Press release from the issuing company

LOS ANGELES, Feb 3, 2003 -- Key3Media Group, Inc., the world's leading producer of information technology tradeshows and conferences, today proposed a comprehensive recapitalization plan designed to provide a strong financial foundation for the Company. The plan is backed by investment funds managed by Thomas Weisel Capital Partners ("TWCP"), which own approximately 68% of Key3Media's bank debt and approximately 38% of its bonds (11.25% senior subordinated notes due 2011). Through the recapitalization, Key3Media will reduce its total debt by 87% from approximately $372 million to $50 million and eliminate all of its existing preferred stock and common equity. Annual interest expense will be cut from approximately $38 million to $3.4 million. TWCP has agreed to provide Key3Media $30 million in debtor-in-possession (DIP) financing in a pre-negotiated Chapter 11 proceeding commenced today. TWCP has also agreed to fund the Company going forward on completion of the reorganization. The proposed plan of reorganization will enable the Company to operate its business with no interruption. Current management will remain in place during the recapitalization, and with the support of TWCP, will move forward with an array of plans to expand programs and services to its clients. Under the proposed reorganization plan, TWCP will own approximately 99% of the recapitalized company, and the general unsecured creditors and bondholders will initially own the remaining 1% of the equity, with the right to buy up to an additional 10% of the equity. Key3Media will implement the proposed recapitalization through a plan of reorganization filed today in the United States Bankruptcy Court for the District of Delaware. The Company aims to emerge from Chapter 11 within 90 days of filing. During the reorganization proceedings, Key3Media will operate its business in the ordinary course. All tradeshows and conferences will take place as scheduled, including COMDEX Fall in Las Vegas (November 15-20), NetWorld+Interop Las Vegas (April 27-May 2), JavaOne San Francisco (June 9-13), Seybold Seminars San Francisco (September 22-25), and all international events and Key3Studios events. "This comprehensive plan is designed to put Key3Media back on track to long-term financial health while giving us the capital strength and operating flexibility we need to hold all of our scheduled tradeshows and conferences. Our clients will now be able to sign up for NetWorld+Interop, COMDEX and our other shows with full confidence," said Fredric D. Rosen, Chairman and CEO. "After a thorough review of our strategic options, we believe this is by far the best alternative for all of our constituencies. Thomas Weisel Capital Partners is an accomplished investor with extensive experience in the technology sector, and with its support, this plan will enable Key3Media to serve its customers, build on its leadership position, and realize its full potential when our markets recover." Lawrence B. Sorrel, Managing Partner of Thomas Weisel Capital Partners and Director of Private Equity at Thomas Weisel Partners, stated, "With a strong portfolio of brands, a large high-caliber client base, and a leading market position, Key3Media is a fundamentally sound company that has been hurt by its capital structure and the declines in the IT and networking industries. We intend to work closely with the Board, management and Key3Media's talented workforce to help the Company execute a successful turnaround, reestablish a strong capital structure and position itself for long-term growth in the global IT tradeshow and conference market, a market with great potential in the years ahead." The Company's common stock may be delisted from the OTC Bulletin Board as a result of the Company's filing under Chapter 11 of the U.S. Bankruptcy Code. Thomas Weisel Capital Partners is the merchant banking affiliate of investment firm Thomas Weisel Partners LLC. TWCP's flagship fund, Thomas Weisel Capital Partners, L.P., is a $1.3 billion private equity fund with backing from leading institutional investors and a current portfolio of over 30 companies primarily focused in the growth sectors of the economy, including media and communications, information technology and healthcare. In total, the private equity business of Thomas Weisel Partners has over $2 billion in assets under management across its merchant banking, venture capital and fund of funds activities and a team of 50 professionals based in San Francisco, New York, Boston, Menlo Park and London.

 

 

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