XO Communications Files Chapter 11
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RESTON, Va. (AP) _ Telecommunications firm XO Communications said Monday it filed for Chapter 11 bankruptcy protection and offered two different potential reorganization plans.
XO, which has struggled along with many other telecommunications firms under heavy debt, has long been expected to file for bankruptcy.
The first plan offered by XO is to follow through on an agreement reached last year with Forstmann Little & Co. and the Mexican telephone company Telmex. Under that deal, the two companies would each invest $400 million in XO in exchange for an 80 percent stake in the company.
But Forstmann Little and Telmex have announced they plan to terminate the agreement and no longer believe that XO can meet its obligations under the deal.
XO says the two companies cannot pull out of the deal unilaterally and insists it can meet the conditions necessary to complete the deal.
If that agreement falls through, however, XO announced plans for a stand-alone restructuring plan that calls for restructuring $1 billion in loans and converting some of that debt into equity. The company said an informal steering committee of lenders to the company has agreed to support that restructuring plan.
``We are gratified that our secured lenders have the vision and confidence to see beyond today’s troubled times and to recognize the potential long-term value of our company,″ said Daniel Akerson, XO’s chairman and chief executive.
Akerson also said XO considers its earlier deal with Forstmann and Telmex to remain in effect and said the company has ``every intention of enforcing our rights under this agreement.″
The bankruptcy filing applies only to the company’s parent, XO Communications Inc., and doesn’t include any of its subsidiaries, which will continue to operate during the restructuring.
Company officials said the filing wouldn’t result in any layoffs or closings of any of its facilities, and XO will continue to pay its employees’ salaries and benefits during the reorganization.