3/29/02 -- 4:31 pm ET -- XO Mulls Icahn Offer, May File Bankruptcy
Reuters
XO Mulls Icahn Offer, May File Bankruptcy
NEW YORK (Reuters) - XO Communications Inc. (XOXO - news), a money-losing telecommunications company, said on
Friday it is considering a $500 million bid by financier Carl Icahn for 50 percent of the company, and that it may file for bankruptcy
protection ``in the very near future.''
The Reston, Virginia-based company had on March 11 rejected a takeover proposal from bondholders led by
the financier. It said it planned to implement a competing plan from buyout firm Forstmann Little & Co., led by
buyout veteran Ted Forstmann, and Telefonos de Mexico (TMX - news; TELMEXL.MX) to inject $800
million and receive an 80 percent equity stake.
XO made its disclosures in its annual report, filed on Friday with the U.S. Securities and Exchange
Commission. The company is one of many emerging telecoms that suffered as demand for its services waned
and its ability to raise cash in the capital markets disappeared.
``We and our financial and legal advisors are reviewing and analyzing the terms of (Icahn's) proposal and are in
discussions with the sponsors of the proposal and representatives of the lenders under our senior secured credit
facility regarding its terms,'' the company said.
XO also said ``it has become clear'' that to implement a balance sheet restructuring necessary for it to run its
business, the company ``will need to commence a bankruptcy proceeding'' and seek a reorganization that will eliminate its current equity and much of its debt. ``Such
a proceeding could be commenced in the very near future,'' it said.
Under Icahn's proposal, XO debtholders would get 50 percent of a reorganized company's equity, XO said. Forstmann and Telefonos de Mexico are offering
debtholders up to $200 million and an 18 percent equity stake, people familiar with the matter said.
XO's auditor, Andersen, said in the SEC filing it has ``substantial doubt about (XO's) ability to continue as a going concern.''
XO shares closed Thursday below 8 cents. They have fallen 99 percent in the last year. |
