Magyar Telecom B.V. Announces Update on Its Petition for Recognition Under Chapter 15 of the US Bankruptcy Code of Its Scheme of Arrangement Under the UK Companies Act 2006 and Post-Restructuring Governance and Ownership Changes

LONDON--(BUSINESS WIRE)--Magyar Telecom B.V. (the “Company”):

Recognition of the Scheme under Chapter 15

As previously announced, a hearing took place before Judge Lane of the US Bankruptcy Court at 2:00 p.m. (New York time) on 3 December 2013 in respect of the petition under Chapter 15 of the US Bankruptcy Code for recognition of the Scheme as a foreign main proceeding and for related relief giving full force and effect to the Scheme and related documents (the “Chapter 15 Order”).

After consideration of the Company’s petition and the relief sought, the US Bankruptcy Court adjourned the hearing of the Company’s petition for the Chapter 15 Order until 11:00 a.m. (New York time) on 11 December 2013. A copy of the order adjourning the hearing, to which Note Creditors should refer, is available on the website of the Company’s Information Agent, Lucid Issuer Services Limited, whose contact details are provided below. The deadline for the filing of any objections to the relief requested under the petition in advance of the adjourned hearing is 4:00 p.m. (New York time) on 10 December 2013.

The Chapter 15 Order is a condition to the Scheme becoming effective as set out in the explanatory statement dated 28 October 2013 in relation to the Scheme (the “Explanatory Statement”).

The Explanatory Statement is available from the Information Agent, whose contact details are provided below. Capitalised terms used in this press release but not otherwise defined shall have the meaning given to them in the Explanatory Statement.

Anticipated Completion of the Restructuring

Subject to the receipt of the Chapter 15 Order on 11 December 2013, the Company intends the Effective Date of the Restructuring to occur on 12 December 2013. Note Creditors who have submitted a valid Account Holder Letter to the Information Agent should expect to receive their Restructuring Consideration Entitlements and/or Cash Option Entitlement (as applicable) on 12 December 2013.

Details of the Restructuring Consideration that will be issued on the Effective Date will be as follows:

(i) Cash Option

The Clearing Price will be €1,000 for every €1,000 of New Notes Entitlement successfully tendered pursuant to the terms of the Cash Option. The aggregate sum to be paid to Note Creditors pursuant to the Cash Option will be €14,949,000. In accordance with the Explanatory Statement, those Note Creditors who validly submitted an Account Holder Letter on or before the Cash Option End Date and elected to tender all or some of their New Notes Entitlement will receive their pro rata proportion of the Cash Option Consideration at the Clearing Price on the Effective Date.

(ii) New Notes, EquityCo Shares and Units

In accordance with the terms of the Scheme, the aggregate New Notes Entitlement of Note Creditors of €155,000,000 will be reduced by the principal value of the New Notes Entitlement successfully tendered by Note Creditors pursuant to the terms of the Cash Option. The aggregate principal value of the New Notes to be issued to Note Creditors on the Effective Date will, therefore, be €140,051,000.

In accordance with the terms of the Scheme, a Note Creditor will receive 1 EquityCo Share for each €1 of principal value of New Notes it receives. Therefore, EquityCo will issue in aggregate 140,051,000 EquityCo Shares to Note Creditors.

Note Creditors will be aware that the New Notes and EquityCo Shares will be issued as a Unit comprising New Notes with a principal value of €1 and 1 EquityCo Share. The aggregate number of Units to be issued to Note Creditors will, therefore, be 140,051,000.

On the Effective Date, Hungarian Telecom Coöperatief will subscribe for New Notes (and will receive the corresponding EquityCo Shares stapled to such New Notes pursuant to the Unit Agreement) with a principal value of €10,000,000 in consideration for the payment of €10,000,000.

Therefore, the aggregate principal value of New Notes issued and outstanding immediately following completion of the Restructuring will be €150,051,000 and the aggregate number of EquityCo Shares issued will be 150,051,000.

Governance Changes

The Company is also pleased to announce that it is intended that certain governance changes will be made as of the Effective Date. In particular, Nikolaus Bethlen, who holds the position of Director and Vice Chairman of the Board of the Company, will be appointed as Chairman of the Company. Robert Chmelar will be appointed to the Board of the Company. Mr Chmelar will replace Craig Butcher, the current Chairman, as one of the Mid Europa Partners’ nominated Directors. Mr Butcher will be stepping down for personal reasons. The Company would like to express its gratitude for his contribution to the business and especially his pivotal role in the Restructuring.

Mark Nelson-Smith and Jan Vorstermans have been selected as non-executive directors to the Board of the Company by the Committee.

Mr Nelson-Smith has served on the boards of a number of companies engaged in the European TMT space, most recently as non-executive director at Primacom GmbH, Germany’s fourth largest cable TV operator. He was previously a Managing Director in the European Communications Group at UBS Investment Bank, where he was responsible for originating and executing transactions for UBS’s telecoms clients across EMEA.

Mr Vorstermans was most recently Chief Operating Officer at Telenet, one of the leading providers of cable services in Belgium, a position he departed in July 2013 having served at the company for 10 years. He has also previously held senior management positions in various companies within the telecommunications space in Europe, including BT Belgium and NYNEX Network Systems.

In addition, David McGowan and David Blunck, who are directors of Invitel Távközlesi Zrt., the Company’s main operating subsidiary, will be appointed to the Board of the Company. Finally, Michael Adams and Roy Arthur, who are employees of the Company’s administrative services provider TMF, will resign from the Board of the Company following the conclusion of their role in the Restructuring. The Company would like to express its gratitude to Mr Adams and Mr Arthur for their contribution.

Subject to the occurrence of the Effective Date, the composition of the Board of the Company will be as follows:

Nikolaus Bethlen, Chairman
Thierry Baudon
Robert Chmelar
Mark Nelson-Smith
Jan Vorstermans
David McGowan
David Blunck

Ownership Changes

Following the Effective Date, the Company will become 49% owned by EquityCo, which is an exempted company with limited liability incorporated under the laws of the Cayman Islands through which the Note Creditors will hold the equity interests in the Company which they will receive as part of the Restructuring. Mark Nelson-Smith and Jan Vorstermans have been selected as executive directors of the Board of EquityCo by the Committee. Mr Nelson-Smith was appointed on 25 November 2013 and Mr Vorstermans will be appointed on or around the Effective Date.

Contact Details

In case of any enquiries, please contact one of the advisers below:

Company Advisers
Houlihan Lokey (Europe) Limited Chris Foley Tel: [phone] Email: [e-mail]	White & Case LLP Stephen Phillips Tel: [phone] Email: [e-mail]
Information Agent
Lucid Issuer Services Limited Sunjeeve Patel / Thomas Choquet Tel: [phone] Email: [e-mail]
Noteholder Group Advisers
Moelis & Company Charles Noel-Johnson Tel: [phone] Email:[e-mail]   Rohan Choudhary Tel: [phone] Email: [e-mail]	Bingham McCutchen (London) LLP Neil Devaney Tel: [phone] Email: [e-mail]   James Terry Tel: [phone] Email: [e-mail]

About Magyar Telecom B.V.

Magyar Telecom B.V. is a private company with limited liability incorporated in the Netherlands and registered at the Chamber of Commerce (Kamer van Koophandel) for Amsterdam with number 33286951 and registered as an overseas company at Companies House in the UK with UK establishment number BR016577 and its address at 6 St Andrew Street, London EC4A 3AE, United Kingdom (Telephone: [phone], Fax: [phone]).