Bondholders Demand That Covad Stop Wasting Cash
Monday, April 30, 2001 11:47 AM ET
NEW YORK (Dow Jones)--A group of Covad Communications Group Inc.'s (COVDE, news, msgs) bondholders are charging that the company is wasting cash and is demanding that the company restructure immediately.
The bondholders estimate Covad has about $600 million in cash on its books.
In a press release Monday, the law firm of Kasowitz Benson Torres & Friedman LLP said the bondholders have demanded a meeting with Covad "at the earliest possible time" to organize a plan to "properly manage and preserve Covad's dissipating assets."
Covad officials weren't immediately available for comment.
Covad shares traded recently at $1.04, down 4 cents, or 3.7%, on Nasdaq volume of 1.09 million shares. Average daily volume is 4.06 million shares.
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Covad Bondholders Demand That Covad Cease Cash Waste and Restructure Immediately
NEW YORK, NY, Apr 30, 2001 (BUSINESS WIRE) -- An organized committee of Bondholders of Covad Communications Group, Inc. (COVDE;) has sent a letter to Covad's Directors and Officers advising them of their fiduciary obligations to Covad's creditors under the current circumstances, to cease wasting its remaining cash assets, and to manage Covad and its assets for the purpose of maximizing the recovery to Covad creditors. According to the Bondholders' estimate, Covad has approximately $600 million in cash on its books, yet Covad has recently stated that it expects to lose approximately $450 million this year. The Company recently failed to timely file its Form 10-K with the SEC and announced on April 23 that it had been delisted from the NASDAQ market.
The Covad Bondholders' letter points to the debacle experienced by NorthPoint Communications Group, Inc. (NPNT), formerly one of the three "independent" Digital Subscriber Line ("DSL") providers, which recently liquidated for $135 million leaving its creditors with staggering losses. In the April 27 letter to Covad from their legal counsel, David Rosner of Kasowitz, Benson, Torres & Friedman LLP, the Covad Bondholders urge that Covad "cannot, like NorthPoint, simply continue to dissipate the funds necessary to restructure and to repay its creditors."
The Bondholders have demanded a meeting with Covad "at the earliest possible time" to organize a plan to properly manage and preserve Covad's dissipating assets.
CONTACT: Kasowitz, Benson, Torres & Friedman LLP David S. Rosner, 212/506-1726URL: businesswire.comtoday's News On The Net - Business Wire's full file on the Internetwith Hyperlinks to your home page.
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