RealTime IT News

New Edge Debt Load A Lot Lighter Now

New Edge Networks continues to win support with its investors, this time adding $146 million in equity to relieve most of its debt load and realize it's goal to run cash-flow positive early next year, officials announced Wednesday.

Goldman, Sachs & Co. led the financing, which put $15 million in New Edge coffers and eliminated $131 million in vendor and bank debts, freeing up a lot of revenue for the broadband provider to pursue other goals -- namely it's continued move into Tier 1 markets throughout the country, which started with the purchase of bargain-basement purchase of @Work in February.

Officials expect to close the deal within two weeks. The other investors in the deal were Accel Partners, Crosspoint Venture Partners and Greylock.

Dan Moffat, New Edge president and chief executive officer, said companies with a solid business model don't have to worry about finding money, even in what he terms the telecom 'Ice Age,' which he predicts is thawing out even now.

"There's a lot of interesting thing's going on in the market today, with Cisco (Systems, Inc.) announcing better than positive earnings and the market went up 300 points," he said. "When we work past the capacity and inventory in the industry, then we'll see business pick up again. The thing that gets left out of the equation with how bad things are in the telecom Ice Age is that the fundamental demand for broadband continues to grow and we will work through those capacity and inventory issues," he said. "Telecom is an essential service."

Entering the digital subscriber line (DSL) industry three years ago as a wholesale provider to Internet service providers in rural and underserved markets, officials quickly realized the importance of diversifying the company's revenue streams to garner more financing.

After the telecom crash, the company retooled its business model and moved to provide services in the wide area network (WAN) and dedicated/private line (T-1s, etc.) industries. The efforts paid off, officials said, pointing to the fact all of its funding came after the dot com bubble burst.

A company this successful must surely go public soon, right? While questions of an impending initial public offering (IPO) have been on the lips of industry reporters and analysts for years now, the company's stance hasn't changed since 2000. Moffat said they are looking into the possibility of going public, but not in today's "doldrum" telecom environment.