CWCI implosion. That must spell a cast on its owner, IIJI. They share offices, perhaps they share the BK judge soon.
UPDATE - Japan's Crosswave seeks bankruptcy protection
Wednesday August 20, 7:11 am ET
(Adds details, company comments)
TOKYO, Aug 20 (Reuters) - Nasdaq-listed Japanese broadband communications firm Crosswave Communications Inc (NasdaqNM:CWCI - News) said on Wednesday it had filed for protection from creditors in Japan with total group debts of 68.4 billion yen ($577 million).
"As a result of severe price competition in the Japanese communications market and a depressed domestic economy, Crosswave has been unable to achieve profitability and has experienced increasing funding constraints," the company said in a statement.
Crosswave was established in 1998 by Internet service provider Internet Initiative Japan Inc (IIJ) (NasdaqNM:IIJI - News), Sony Corp (Tokyo:6758.T - News) and Toyota Motor Corp (Tokyo:7203.T - News) to provide data communications services to customers in Japan.
IIJ, which is owned by Itochu Corp (Tokyo:8001.T - News), Sumitomo Corp (Tokyo:8053.T - News) and NTT Communications, holds a 37.9 percent stake in Crosswave while Sony and Toyota each hold 23.9 percent.
Crosswave fell into negative net worth in June when its liabilities exceeded assets by $10 million.
The company said on Wednesday it had filed for bankruptcy protection as a way to continue to provide services and avoid the confusion that would result from the suspension of its services.
"Through the reorganisation process, Crosswave hopes to obtain new funding to supplement Crosswave's existing capital and help it restructure its business operations," the statement said.
A Crosswave spokesman said the company's fate rested with its court-appointed administrator, but he said he could not rule out the possibility of a rehabilitation under a private equity fund such as U.S. investment firm Ripplewood Holdings.
Ripplewood, which has shown its interest in the Japanese telecoms industry, is expected to strike a $2 billion deal soon to buy the Japanese fixed-line operations of British telecom giant Vodafone Group (London:VOD.L - News).
Crosswave reported a first quarter net loss of 3.45 billion yen ($29.11 million) on revenues of 4.97 billion yen ($41.9 million).
BLOW TO IIJ
IIJ, which is also listed on Nasdaq, said Crosswave's filing would have a serious impact on its financial position and operations. But it said it had no plans to seek judicial relief to protect its own assets.
IIJ, whose president, Koichi Suzuki is also the head of Crosswave, is estimated to have lost 10.9 billion yen ($92 million) from its investment in Crosswave, including loans and loan guarantees, an IIJ spokesman said.
He said the company would seek new funding to improve its financial condition.
The impact on other shareholders is expected to be limited.
Toyota, which holds $25 billion in cash, has poured a total 7.29 billion yen ($61.5 million) into Crosswave -- six billion yen at the time of establishment and 1.29 billion yen in loans later.
"When we decided to invest in the venture, we were hoping to aid in the expansion of infrastructure for new data communications services," a Toyota spokesman said.
"We deeply regret that it has come to this, but we are hoping for Crosswave's success in rehabilitation."
Shares in Crosswave closed down 2.47 percent at $6.33 on Nasdaq on Tuesday.
($1=118.51 yen) |
