Associated Press
Saturday, November 4, 2006; D01
BearingPoint Inc. said yesterday that it has reached an agreement with its bondholders to resolve concerns that it is in default, forging a deal that would change the terms of its bonds in exchange for higher interest rates.
A New York state court in September found the McLean technology consulting firm in default on some of the bonds because of its inability to file a 10-K annual report for 2005 with the Securities and Exchange Commission. The agreement waives the requirement that BearingPoint file reports to the SEC and increases the interest rate on the company's bonds by an amount ranging from 0.1 to 0.85 percentage points.
The agreement is contingent on a group of the company's bondholders dropping a lawsuit pending in New York's Supreme Court that alleges that the company is in default.
The company has not filed timely financial statements in more than two years after inheriting accounting and other problems from its days as part of KPMG LLP. BearingPoint has since spun off from KPMG and provides management and information-systems consulting for large corporations and government agencies. In 2005, a new management team was put in place, led by chief executive Harry L. You.
The company is appealing the state court's default ruling, and You said in a statement that BearingPoint was aiming to complete its 10-K by Thanksgiving.
In addition to paying higher interest rates, BearingPoint also said it had amended the terms of a $150 million credit facility to extend the filing deadlines for its 10-K annual report and several quarterly reports.
Shares of BearingPoint rose 38 cents, or 4.59 percent, to $8.65 in New York Stock Exchange composite trading. They had gained 5.2 percent this year before yesterday.
