( BW)(NY-WINSTAR-COMMUNICATIONS-2)(WCII) Winstar Files $10 Billion
Suit Against Lucent Technologies; Company Also Seeks Immediate
Injunctive Relief
Business Editors
NEW YORK--(BUSINESS WIRE)--April 18, 2001--Winstar Communications
Inc. (NASDAQ: WCII) today announced that it has filed a lawsuit
against Lucent Technologies in the U.S. Bankruptcy Court for the
District of Delaware. The lawsuit seeks $10 billion in damages for
Lucent's breach of its obligations under its strategic partnership
agreement with Winstar. In addition, Winstar is seeking immediate
injunctive relief requiring Lucent to specifically perform its
contractual obligations, including the payment of more than $90
million, which Lucent failed to pay to Winstar on March 30, 2001, in
breach of its agreement.
Winstar's legal filing today alleges that "Lucent represented that
it had the expertise, personnel and financial wherewithal to undertake
its obligations under the Supply Agreement ... Little more than two
years into the five-year agreement, Lucent has shown its promises were
hollow."
The complaint and supporting materials further allege that Lucent
has been under close scrutiny by analysts regarding its vendor
financing. Lucent has publicly confirmed that in order to conserve
cash, Lucent is actively managing its vendor-financing portfolio. As
Lucent has publicly stated: "We actively manage our vendor-financing
portfolio to minimize the impact on Lucent's cash requirements."
Lucent breached its agreement with Winstar and injured Winstar's
ability to complete its broadband network. Lucent's breach of its
contract with Winstar has forced the Company to seek protection under
the U.S. Bankruptcy Code.
Winstar emphasized that this lawsuit was filed to recover the
damages to its business for its shareholders and bondholders. The
Company stressed that its ability to emerge from the Chapter 11
process as a successful operating entity is not contingent on the
receipt of any damage award in this lawsuit.
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BW2175 APR 18,2001 5:17 PACIFIC 08:17 EASTERN
( BW)(NY-WINSTAR-COMMUNICATIONS)(WCII) Winstar Files Voluntary Chapter
11 Petition
Business and Technology Editors
NEW YORK--(BUSINESS WIRE)--April 18, 2001--
Company Seeks Financial Restructuring Through Chapter 11 Process
Company Continuing to Provide Service to its 30,000 Business Customers
Winstar Communications Inc. (NASDAQ: WCII) today announced that
the Company, along with certain of its subsidiaries, has voluntarily
filed for protection under Chapter 11 of the U.S. Bankruptcy Code with
the U.S. Bankruptcy Court for the District of Delaware. The Company
intends to utilize the Chapter 11 process to restructure its balance
sheet, while continuing to provide service to its 30,000 business
customers and maximizing the value of its extensive broadband network
and comprehensive set of broadband services.
The Company emphasized that this Chapter 11 filing will not impact
day-to-day operations with regard to its employees, customers and
general business operations. The Company has arranged for
debtor-in-possession (DIP) 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.
William J. Rouhana, Jr., chairman and chief executive officer of
Winstar said, "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. Winstar has the most widely available
end-to-end broadband network for businesses. The Company has more than
30,000 business customers - employing more than 1 million people -
that produced an annual revenue stream of more than $700 million in
year 2000. During the restructuring process, we 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 concluded, "While this was a very difficult decision to
make, given the current circumstances, we determined that we needed to
take decisive action for our employees, customers and creditors, to
maximize the value of our business."
Nathan Kantor, president and chief operating officer of Winstar
added, "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." |
