RCN to File for Bankruptcy Protection
Tuesday February 17, 4:49 pm ET
RCN to Seek Bankruptcy Protection As Part of Strategy to Attract New Investors, Stay in Business
biz.yahoo.com
PRINCETON, N.J. (AP) -- Struggling cable company RCN Corp. said it will file for bankruptcy as part of a strategy to attract new investors and stay in the business of bundling cable television, Internet and telephone service.
"We anticipate filing Chapter 11 in order to consummate a deal," Barak Bar-Cohen, an RCN spokesman, said Tuesday. He couldn't say when the company might file.
Managers of Princeton-based RCN hope to swap $1.7 billion in debt for a share in the company, Bar-Cohen said.
Bar-Cohen said service to RCN's 436,000 subscribers nationwide will not be disrupted.
He said the company is negotiating with several potential investors, although he declined to say who they were, and hopes to finalize an equity-for-debt deal before March 1.
Despite conjecture in recent published reports, Cohen said the company has no plans to sell its Lehigh Valley system, which includes 100,000 subscribers, and it one of the company's most attractive assets. Though such a sale could provide a cash infusion, it would be inconsistent with the company's longer-range plans of attracting new partners and continuing to grow in the highly competitive telecommunications market.
Sales growth has been modest at the company, which has had steep layoffs.
RCN stock, which had reached $75 a share in early 2000, was unchanged to close at 49 cents a share on the Nasdaq stock market.
One of RCN's biggest investors, Microsoft co-founder Paul Allen, sold 40 percent of his shares last month for a loss of about $650 million.
On Valentine's Day, RCN chief executive David C. McCourt issued a rosy statement on a new Web site, www.rcntomorrow, intended to provide updates on the company's survival plans.
"Some of our competitors will try to suggest that RCN doesn't have much of a future," the statement read. "Nothing could be further from the truth." |
