Winstar files for Chapter 11.
The telecommunications company, which, in the heady days of 2000, had wired so many of the city's class A buildings, has seen its revenue drop off dangerously since the dot-com implosion.
"We expect to emerge from the Chapter 11 process with a new balance sheet that has significantly less debt, thereby dramatically lowering our interest payments and providing us with more operating flexibility," said William J. Rouhana, Winstar's chairman and chief executive officer.
Last week, the company also filed a $10 billion lawsuit against Lucent Technologies Inc. for breach of contract. Both the suit and the bankruptcy filing are before the U.S. Bankruptcy Court for the District of Delaware. Winstar claims that Lucent reneged on an agreement to provide financing, including a more than $90 million payment that was due March 30. The breach of agreement has injured Winstar's ability to complete its broadband network, according to Winstar statements.
A Lucent Technologies spokeswoman said the lawsuit is "absolutely frivolous and without merit."
"We did not breach any contract. The truth is they are in breach of their financial covenant to us," said Mary Lou Ambrus.
Winstar said its ability to emerge from bankruptcy is not contingent upon its winning the lawsuit against Lucent.
Winstar has emphasized that the bankruptcy filing will not impact day- to-day operations with regard to employees, customers and general business operations. The company has arranged for debtor-in-possession financing with an initial commitment of $75 million, from a consortium of banks comprised of CIBC, Citicorp, Credit Suisse First Boston, The Bank of New York and The Chase Manhattan Bank. This commitment may be increased to as much as $300 million upon the satisfaction of certain conditions, according to company officials.
"This financing will enable us to fund our business activities, pay employees and suppliers, and ensure that we can continue to meet your needs as we complete the restructuring process," according to company statements.
Winstar also said that the bankruptcy filing will not impact pricing, or the products and services the company offers.
"We have been building our broadband network for more than seven years, making us one of the most experienced and established companies in our sector. We are confident that focusing on the potential of our existing network, coupled with a more efficient organization, will allow Winstar to emerge from this process as a stronger company," said Nathan Kantor, Winstar's president and chief operating officer.
Winstar has more than 30,000 business customers and employs more than one million people. The company produced an annual revenue stream of more than $700 million in 2000. During the restructuring process, Winstar will focus on maximizing the untapped potential of the 140,000 addressable businesses in the 4,800 buildings that are directly connected to our already existing, domestic built-out broadband network, Rouhana said.
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|Publication:||Real Estate Weekly|
|Article Type:||Brief Article|
|Date:||Apr 25, 2001|
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