Is it time to scalp some XO again?
Wednesday January 16, 12:50 pm Eastern Time
XO reaches definitive pact with Forstmann, Telmex
(UPDATE: Adds details throughout)
NEW YORK, Jan 16 (Reuters) - XO Communications Inc. said on Wednesday it reached a definitive agreement with buyout firm Forstmann Little & Co. and Telefonos de Mexico SA de CV (Telmex) on a previously announced plan to invest $800 million to take control of the voice and data services provider.
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XO (OTC BB:XOXO.OB - news) also said it remained in talks with lenders and creditors to restructure its balance sheet, which is a requirement before Forstmann and Telmex complete their investment for a controlling stake in the company.
Reston, Virginia-based XO said it reached a so-called forbearance agreement with the lenders related to its secured credit facility. Until April 15, lenders agreed not to call XO into default or make demands relating to the company's fourth-quarter minimum revenues.
XO said it was in talks with the lenders and debtholders to modify its secured credit facility, and to restructure its senior notes.
Shares of XO are down 1.6 cents, or 12.6 percent, to 11.1 cents, in midday Bulletin Board trading. XO is one of several emerging telecommunications companies that suffered from the slumping economy and stock market, slowing demand, and a marked tightening of capital markets as investors shied away from funding money-losing upstarts.
Under the agreement announced in November, Forstmann Little and Mexican telecommunications company Telmex (NYSE:TMX - news), each will invest $400 million and get 39 percent of the company.
The remaining equity, other than that allocated to company employees, will be held primarily by debt holders. The deal would essentially leave current stockholders with nothing, XO said. |
