NEW YORK -- Maryland Cable Corp., the Prince George's County cable television operator, defaulted on its bank loans yesterday after extended negotiations with bankers to secure a waiver on principal repayment of its $92 million bank loan failed.
The company has been given 30 days by a bank syndicate led by Citicorp to devise a comprehensive restructuring plan on its debt. In the meantime, service will continue for all subscribers.
"There will be no impact on our customers or our business," said John Motulsky, senior vice president for MultiVision, the Greenwich, Conn.-based company that operates the Maryland system. "We have adequate cash on hand to pay our bills as they come due."
A one-month waiver on principal repayment had been granted at the end of September. The company had been working with Chemical Bank to work out a comprehensive revision of its financing, and discussions with creditors on a temporary and permanent resolution have been going on for several weeks.
"Both sides decided to focus on the terms of the restructuring rather than the terms of the waiver," Mr. Motulsky said.
With the company's default, banks can request an acceleration of loan payments, triggering a bankruptcy, but Mr. Motulsky said he doubted this would occur. This "doesn't really change anything for us. We have been negotiating, and we continue to negotiate."
In addition to the bank debt, the company has an outstanding $162.4 million subordinated note. Since no cash payment is due on the loan until 1994, the company will not technically default on it unless the banks trigger a bankruptcy. It was downgraded by Standard & Poor's last Monday, however, to near-default status, with the rating agency saying the repayment of principal and interest is unlikely.