Today's Paper
Much of the contents of the past week's editions of the Times Union.
CAI Wireless faces closure without new investors
Telecommunications firm needs funds by Feb. 20 to pay off $27M debt
DAVID ORENSTEIN
Business writer
The next two weeks could either break or revive CAI Wireless Systems
Inc.
The cash-starved company is almost out of money, and unless the company
can negotiate a strategic partnership with one of two unnamed
telecommunications companies, it will not be able to pay off the $27
million in debt that comes due Feb. 20.
CAI has accumulated the $27 million debt, including $2 million last
week, by issuing notes at a 13 percent interest rate to an unnamed
backer. Investment sources said the investor is Merrill Lynch Asset
Management, which already holds a significant share of CAI debt and
stock that it hopes will be paid back.
CAI chief financial officer James Ashman did not return phone calls
seeking comment. Sources named Merrill Lynch on condition that their
names not be used. Spokesmen for Merrill Lynch in New York did not
comment on inquiries about whether the company held CAI debt and whether
it was accumulating more.
CAI has told investors in several recent press releases and filings with
the Securities and Exchange Commission that it may not have enough cash
to continue in business.
The company has held out hope, however, that it will succeed in forging
a strategic partnership with a telecommunications company with the cash
to bail it out. CAI also hopes that regulatory rulings will allow it
expanded use of its digital wireless spectrum for two-way transmission
of video, voice and data signals. Finally, the company is looking to
wholesale its data transmissions for resale by other Internet Service
Providers.
Aryeh B. Bourkoff, a director with CIBC Oppenheimer in New York, said
that even if CAI can get an extension on its deadline to pay back the
investor, the company will still need to sign a strategic partner soon.
Under a separate deal renegotiated with Bell Atlantic Corp. last year,
CAI can pay back a $100 million debt to the telecommunications giant for
only $40 million if it acts before Feb. 28. After Feb. 28, the debt
rockets up to $140 million, which includes the interest that has accrued
on top of the $100 million principal.
Bourkoff said he spoke with Ashman this week, and Ashman sounded
confident that there is still interest in a strategic partnership
involving CAI's spectrum.
"There is an incentive to do this sooner rather than later,'' Bourkoff
said.
First published on Thursday, February 5, 1998 |
