Reports of Microcell Telecommunications Inc.’s imminent departure from the wireless space may have been slightly premature as the company announced Friday that it has reached an agreement to eliminate $1.7 billion in debt.

Under the deal, reached with both secured lenders and unsecured noteholders, Microcell, which operates the Fido wireless network, would see its debt eliminated while reducing its annual interest payments by approximately $200 million.

The company said it intends to continue conducting its operations and will continue to provide customers with normal services and pay its suppliers for all goods and services. Microcell said this would all be possible because it currently has $100 million in cash and in short-term investments to operate normally.

Microcell will file an Order of the Superior Court of the Province of Quebec under the Companies’ Creditors Arrangement Act (CCAA) to seek the court’s protection.

Under the terms of the proposed recapitalization plan, the company will emerge with $350 million in debt obligations and expects to raise an additional $75 million in working capital financing. All of the company’s secured debt, approximately $600 million, will be exchanged for $350 million of new secured debt.

Microcell is online at