Alvarez & Marsal

Amidst growing liquidity concerns, senior lenders to Microcell Telecommunications, Inc.,
a Canadian wireless services provider, hired Alvarez & Marsal to assess Microcell’s business
model. The company had about C$1.9 billion in debt, including approximately C$600
million in senior lender debt that was trading at a deep discount. The Alvarez & Marsal team,
which included former telecommunications executives, evaluated Microcell’s business plan
and worked with its financial advisor and management to develop restructuring
alternatives. After focusing on cash generation and moderating growth, Alvarez & Marsal
determined that the company had value and convinced senior lenders that maximum
recoveries would be achieved by restructuring its obligations. Alvarez & Marsal and the
agent bank negotiated a prearranged CCAA (bankruptcy) plan, resulting in the senior
lenders receiving $350 million of new debt and approximately 67% of new equity. While the
recoveries at emergence were viewed favorably (equivalent to 100%), current returns are
even more impressive. When Microcell exited CCAA in May of 2003, equity traded at
roughly C$15. In just over one year that value had doubled.