Teligent Gets Second Reprieve in Fund Search
By Jeanie Stokes
from the May 21, 2001 issue of Broadband Week
This week's the watershed for Teligent Inc. The broadband fixed wireless had until May 21 to get new financing that would satisfy its bankers and--it hoped--keep it out of bankruptcy court.
Vienna, Va.-based Teligent's lenders, led by Chase Manhattan Bank, needed the financially troubled carrier to come up with another $350 million in new funding, or be considered in default on an $800 million credit facility.
The May 21 deadline was an extension of an earlier deadline, which provided some breathing room for Teligent's potential white knight, long-distance carrier IDT Corp., to work out a deal with creditors before Teligent heads for the bankruptcy courts.
The extension is the second since April 30, and came after Teligent fired 800 workers, or about 35 percent of its remaining 2,300 workers in its latest moves to help preserve its rapidly dwindling cash. The company has said it has no money to operate beyond June unless it gets new funding.
"We are re-evaluating some of the services in certain markets and may curtail some services in some of those markets," says spokeswoman Tita Thompson, describing as incorrect media reports that Teligent was shutting down parts of its network.
Newark, N.J.-based IDT quickly has acquired a 37 percent stake in Teligent by swapping shares in its subsidiaries for the Teligent holdings of AT&T Corp.'s Liberty Media Group, headed by former cable baron John Malone, and those of Dallas investment company Hicks, Muse, Tate & Furst.
IDT also has acquired about 42 percent of the voting power in bankrupt competitive local exchange carrier ICG Communications Corp. in similar transactions with Liberty Media and Hicks. The operations of ICG and Teligent had been heading for consolidation until ICG's business and its stock cratered last year, forcing its Chapter 11 bankruptcy filing.
It's looking like IDT has "a fair amount of control over the restructuring discussions and potentially could enable Teligent and ICG to emerge where they can continue with their businesses with a much cleaner balance sheet and capital structure," says analyst Riyad Said, who covers IDT for Friedman, Billings, Ramsey & Co.
While that could involve straight reorganization under Chapter 11 bankruptcy protection from creditors, a more likely scenario is that some sort of prepackaged deal is in the works with Teligent's creditors to figure out a way to restructure the debt, Said adds.
IDT is looking for new businesses with higher growth and higher margin characteristics than its existing long distance phone business. Teligent's fixed wireless spectrum and broadband businesses and ICG's local and last-mile fiber assets could be a nice complement, Said says.
Nasdaq, which has threatened to delist Teligent, suspended trading of the company's stock May 11 pending further information from the company. The shares, which had traded as high as $31 during the past year, last traded at 56 cents a share. Teligent's stock will remain halted indefinitely until the company provides information that satisfies the stock exchange, Thompson says.
Teligent's not the only fixed wireless company in trouble with Nasdaq. Equipment provider Adaptive Broadband Corp. also says trading of its stock was suspended May 14.
Sunnyvale, Calif.-based Adaptive says it's late filing its first quarter SEC report because the sharp downtown in the point-to-multipoint segment of the fixed wireless telecom equipment industry has rendered its previous financial guidance moot.
Adaptive expects revenue for the quarter to be only $1 million, less than the $2 million low-end of the range it forecast in February. Additionally, Adaptive is completing a full accounting review of its results for the fiscal year ended June 30, 2000, and says it may have to restate those results.
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