Heartland Wireless Inc., the Plano, Texas-based wireless
cable television company, filed a prenegotiated Chapter 11 bankruptcy petition in U.S.
Bankruptcy Court in Delaware on Dec. 4, listing assets of $194.2 million and liabilities
of $346.6 million.
As part of the reorganization plan, Heartland will cancel
all of its outstanding stock and issue new shares, 97 percent of which will go to holders
of the company's senior notes. Holders of the company's convertible subordinated
discount notes will receive the remaining shares.
Heartland has been struggling in recent years, as have
other wireless cable companies. For its third quarter ended Sept. 30, Heartland reported
net losses of $123 million, or $6.23 per share, nearly three times net losses of $41.8
million, or $2.13 per share, during the same period last year. Heartland has 163,000
subscribers, down from 197,000 in 1997.
For the nine-month period, net losses rose to $198.8
million, or $10.09 per share, compared to $105.2 million, or $5.36 per share, last year.
Revenue declined by 9 percent during the quarter, to $18.2
million. For the nine-month period, revenue fell 5 percent to $55.9 million.
Cash-flow losses doubled during the quarter, from $800,000
to $1.6 million. For the nine-month period, earnings before interest, taxes, depreciation
and amortization (EBITDA) actually improved, with the company showing a $165,000 deficit,
compared to losses of $3.34 million for the same period last year.
Marjean Henderson, a spokeswoman for Heartland, said if the
bankruptcy plan is approved by the court, Heartland should emerge virtually debt-free. She
added that after approval, Heartland expects to continue to execute its business plan of
modest subscriber growth in video services, exploit its relationship with DirecTV and
expand its offerings in high-speed Internet access.
Heartland began reselling DirecTV service to its
multiple-dwelling-unit customers in November 1997 and in August to single-family units in
50 of its 57 markets. Although the company would not release subscriber numbers, it says
the partnership has been going well.
The agreements with DirecTV do not signal an exit from the
wireless video market, Henderson said. Heartland packages broadcast and premium channels
via wireless with its DirecTV offering.
"We are not at all de-emphasizing wireless," she
said. "We're offering a combination."
Heartland also has high hopes for its high-speed Internet
service, currently being tested in Sherman, Texas. Henderson said that once those tests
are completed, the company expects to roll out the service in several of its markets next
year.
