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Birch Telecom Emerges From Chap. 11

October 1, 2002

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KANSAS CITY, Mo. (AP) _ Birch Telecom Inc. announced Monday that it has emerged from Chapter 11 bankruptcy after completing a reorganization of its debt.

The company filed for bankruptcy in July. Its reorganization plan erased $233 million in debt for privately held Birch, based in Kansas City, Mo.

Under the plan, bank lenders have cut Birch’s debt in half, to about $100 million, and received 80 percent of the company’s equity. Bondholders exchanged all their debt, about $133 million, for a 20 percent stake in the company.

Dave Scott, Birch’s president and chief executive, said none of the company’s suppliers or employees was harmed by the reorganization.

``All of the companies providing goods and services to Birch have been paid on a full and timely basis throughout the process,″ Scott said. ``We neither sought nor received any reduction in trade debt.″

Despite the bankruptcy filing, Birch’s sales were up 20 percent in August and are expected to be similar in September, Scott said.

The company has more than 100,000 customers and nearly 400,000 phone lines in Missouri, Kansas and seven other states. It has 1,100 employees, including about 400 in Kansas City.

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On the Net:

http://www.birch.com

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