High River Opposes Proposed Prepackaged Plan Of Broadview Networks Holdings Inc.

NEW YORK, Aug. 10, 2012 /PRNewswire/ -- High River Limited Partnership today released the following open letter to senior secured noteholders of Broadview Networks Holdings, Inc. (the "Company") regarding the Company's proposed Joint Prepackaged Plan of Reorganization Debtors, dated July 13, 2012 (the "Prepackaged Plan").

Dear Fellow Noteholders:

High River Limited Partnership ("High River") is the holder of approximately $51 million of the Company's senior secured notes due September 1, 2012 (the "Senior Secured Notes").  Like you, High River has received the Company's Disclosure Statement for its Prepackaged Plan (the "Solicitation Materials").

HIGH RIVER DOES NOT SUPPORT THE PREPACKAGED PLAN AND URGES YOU TO VOTE "No" on the plan.  Your vote is important. In order to approve the Prepackaged Plan the Company needs, among other things, the approval of more than 1/2 of all voting holders of Senior Secured Notes, so every vote counts.  Vote "No" Now!

For the reasons set forth below, High River believes that the Solicitation Materials and the Prepackaged Plan they contemplate, reflect an artificially inflated valuation of the Company.  High River believes that by overstating the Company's value, the Company is shifting value to its shareholders (who control the Company's board).  In addition we have proposed an alternative plan for the Company, but the Company is refusing to negotiate that transaction with High River, although we believe that alternative could yield a better result for holders of Senior Secured Notes.  We have also provided the Company with a letter expressing our concerns with the Prepackaged Plan and Solicitation Materials but have not received a substantive response from the Company.

According to the Solicitation Materials, the holders of Senior Secured Notes are being offered a package of new debt and equity securities that will provide each holder of Senior Secured Notes with a recovery equal to the full, par amount of such holder's notes, plus all interest accrued thereon (estimated in the Solicitation Materials to aggregate $317 million).  To achieve this level of recovery, based on the numbers set forth in the Solicitation Materials, the enterprise value for the reorganized Company must be at least $317 million, not taking into account the dilutive effect of the new 8-year warrants to purchase 15% of the reorganized Company's common stock, which are to be issued to holders of the Company's outstanding preferred shares (the same people that control the Board).  In an effort to support this position, the Solicitation Materials attach a Valuation Analysis that sets the enterprise value of the Company at between $281 million to $343 million.

High River believes that the Valuation Analysis materially overstates the value of the reorganized Company and is premised on projected financial results that are not achievable in our opinion.  Among other things, the Company's financial statements indicate that Broadview's revenues for each of the past 12 calendar quarters, have consistently shown an annual decline of 7-13% with an average decrease of 9%.  This downward trend continued and in fact accelerated in Q1 of 2012 with revenues declining 10% year over year.  Given this history, we believe that it is highly unlikely that the Company will be able to achieve its revenue projection for 2012 which implies a revenue decline of only 4.7% for the remainder of the year.  We believe that the projections going forward are equally questionable.  This view is validated by the fact that the Senior Secured Notes are currently trading for about 65 cents on the dollar.

In our opinion holders of Senior Secured Notes have an opportunity for an enhanced recovery at Broadview---an opportunity that we believe the Prepackaged Plan supported by the Company will not achieve.  We believe that the primary beneficiaries of the Prepackaged Plan are the holders of the preferred stock (who also control the Board).  Please consider the forgoing as you vote.

REMEMBER YOUR VOTE IS IMPORTANT.  VOTE "NO" ON THE PREPACKAGED PLAN.  IF YOU HAVE ALREADY VOTED "YES" YOU CAN WITHDRAW YOUR VOTE BY PROVIDING WRITTEN NOTICE THEREOF IN ACCORDANCE WITH THE INSTRUCTIONS SET FORTH IN ARTICLE IX OF THE DISCLOSURE STATEMENT INCLUDED IN THE SOLICATION MATERIALS ENTITLED "SUMMARY OF VOTING PROCEDURES" AND SUBMITTING A NEW BALLOT VOTING "NO".

High River Limited Partnership

SOURCE High River Limited Partnership