Next-generation broadband-network provider XO Communications Inc. took one
step closer to emerging from Chapter 11 bankruptcy with the approval of its
reorganization plan.
A U.S. bankruptcy court judge in New York approved the plan, which included a
bailout investment by Forstmann Little & Co. and Télefonos de México S.A. de
C.V. (Telmex).
Should that funding fall through, the plan includes a backup, stand-alone
arrangement. That may be a good thing -- Forstmann Little and Telmex have told
XO they believe it is virtually impossible to meet conditions for the original
investment agreement, which expires Sept. 15, and they are unwilling to waive
any of the conditions.
That agreement calls for the two investors to each kick in $400 million and
take an 80 percent ownership stake in the Reston, Va.-based company.
XO leaders argued that Forstmann Little and Telmex don't have the right to
terminate the agreement and that the conditions are still valid.
Founded by telecommunications entrepreneur Craig McCaw, XO provides
broadband-communications services in 65 markets nationwide. But the Internet
collapse has hit the carrier hard, and it filed for reorganization in June,
following the lead of broadband-network peers Global Crossing Ltd. and Williams
Communications Group Inc.
