Under the Financial Microscope
Teligent to continue operations; seeks bankruptcy protection
By Jeanie Stokes
from the June 4, 2001 issue of Broadband Week
The future of fixed wireless broadband provider Teligent was little clearer after the company ended weeks of speculation by filing for bankruptcy protection late last month.
Vienna, Va.-based Teligent filed the voluntary Chapter 11 petition in the U.S. Bankruptcy Court for the Southern District of New York, listing assets of $1.2 billion and $1.65 billion in debts. The company, which was unable to raise $350 million in new funding to satisfy creditors, says it intends to continue providing broadband voice and data services while it reorganizes its capital structure.
"Our goal is to emerge from this reorganization with the appropriate cost framework to allow us to maximize the value of our nationwide network, positioning the company for significant future growth," says Yoav Krill, who took over as chief executive officer in May after long distance carrier IDT Corp. boosted its stake in Teligent to 37 percent and ousted former CEO Alex Mandl.
Teligent entered an interim arrangement with its lenders to provide funds for near-term operations, subject to certain conditions. It did not detail terms of the lending agreement.
The wireless competitive local exchange carrier has been seeking new capital since August. Earlier this year, it amended its fully-drawn down $800 million credit agreement with the Chase Manhattan Bank, Goldman Sachs Credit Partners, Toronto Dominion Bank and other lenders. It was given until April 30 to nail down at least $250 million in new vendor financing and another $100 million in funding backed by convertible notes or be in default on the credit facility. The company's lenders twice extended the deadline for complying until May 21, but when no new lenders appeared, Teligent defaulted on the credit line.
The announcement of the bankruptcy filing made no mention of the role to be played by Newark, N.J.-based IDT.
It stepped in to pick up the stakes in Teligent held by AT&T Corp.'s Liberty Media Group, and Dallas investment company Hicks, Muse, Tate & Furst. IDT also acquired about 42 percent of the voting power in another bankrupt CLEC ICG Communications Corp. in similar transactions with Liberty Media and Hicks.
Teligent's stock hasn't traded since May 11 when the Nasdaq National Market suspended trading in the wake of news reports that the company had slashed more than 35 percent of its jobs. The shares, which had traded as high as $31 during the past year, last traded at 56 cents a share.
Teligent has told the Securities and Exchange Commission it has enough cash to stay in business through June, but needs additional sources of financing starting in the third quarter. Its available cash, cash equivalents and short-term investments as of March 26 totaled $194 million, down from $351 million on Jan. 8.
Teligent had hoped to continue operations through the end of the year with the help of a $250 million private equity placement with Rose Glen Capital Management LP, but that deal fell through in February, when Teligent's share price dropped below a required $2 a share.
Teligent delivers fixed wireless broadband services to more than 4,100 office buildings nationwide, carrying voice, data and video signals that travel from a rooftop antenna to the building's internal wiring system.
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