Winstar Retrenches To Say Afloat
from the April 16, 2001 issue of Broadband Week
Broadband services provider Winstar Communications Inc. has slashed 2,000 jobs and scaled back capital spending as it revamps its business plan, hoping to stay afloat until it can raise more money.
The company also delayed filing its 2000 10-K annual report to the Securities and Exchange Commission, because of "discussions concerning certain material transactions" whose outcome is uncertain.
Winstar's comments about its ongoing discussions raised questions among analysts about the company's future. Since Lucent Technologies has withdrawn funding commitments to a European fixed wireless provider, "Lucent may be backing away from vendor commitments to Winstar," says Merrill Lynch's Ken Hoexter. In February, Winstar had said it could borrow up to $1 billion at any one time of a $2 billion credit facility with Lucent.
Without new funding, Winstar could be heading for a restructuring, says Hoexter, who downgraded the stock to "neutral" from "buy."
Credit rating firm Moody's Investors Service Inc. also cut its rating further on $6.3 billion in Winstar debt, which already was carrying a high-risk, junk bond rating. Without additional funding, Winstar's debtholders are unlikely to recover their investments, Moody's says.
Questions from investors about a possible buyout by Qwest Communications International Inc. prompted that Denver-based company to issue a statement saying it doesn't plan to invest in, or buy any assets of Winstar.
Winstar, which operates in 60 U.S. markets, expects to file its 10-K this week. The New York-based company says it will concentrate on increasing penetration of its existing network of 5,400 buildings rather than continuing to expand into new markets.
The company had 4,700 employees before the planned cuts.
-- Jeanie Stokes
|
