RealTime IT News

@Home At Issue With Creditor Concerns

Popular nationwide cable Internet service provider (ISP) Excite@Home has a bone to pick with one of its creditors, which officials say will put the company out of business if a settlement isn't reached over term conditions that come due Friday.

On Monday, the company announced it was disputing the fact it is likely in breach of contract for a $50 million secured loan made June 8. Promethean Asset Management, LLC, a New York-based investment firm that manages two investment firms that originally floated the loan, acknowledged it was going to call @Home to task for failing to meet terms of the agreement.

But, officials said, they would "discuss @Home's options and ways in which the terms of the agreement could be honored," a statement released by the company stated.

Four days isn't much time for @Home to come up with a viable solution and many analysts and pundits are already predicting the demise, via bankruptcy, of the popular company. Officials have confirmed this, saying that full payment of its loan to pay off creditors would "have a materially adverse impact on the company's liquidity and its ability to fund its operations."

With roughly $1 billion in debt and a loss of $346 million in the month of July alone, the embattled cable Internet provider recently switched auditors last week from Ernst & Young, which has looked after the @Home's accounts since 1999.

They were replaced by PricewaterhouseCoopers, a move officials said they were mulling long before Ernst & Young came out with its filing to the Securities and Exchange Commission, calling @Home a "going concern" after burning through much of the $185 million emergency funds it freed up after renegotiating a backbone deal with part-owner AT&T and $100 million bond sale.

Announcements like these the past week do nothing to assuage shareholder confidence, which has taken resulted in another plunge Monday to @Home stock values on news of the imminent payment demands. Per share prices that started the day at 50 cents per share quickly plummeted to 40 cents, and have been bouncing between the two figures throughout the day.

The death of @Home, with more than double the number of cable Internet subscribers (at 3.3 million) than its competitors RoadRunner (1.4 million) and AT&T Broadband (1.3 million), would send millions of subscribers scrambling for a new connection and casting further doubt on a sector long-known for its shaky service.

@Home officials can point to the demise of a digital subscriber line (DSL) provider for a crash course on the affects of a hasty sell off. NorthPoint Communications, a data competitive local exchange carrier (DLEC) out of California, filed for Chapter 7 bankruptcy protection June 20. Creditors, instead of waiting for possible rebound in the markets or "testing the waters" of potential buyers, demanded money immediately on any remaining assets and in the end got little more than pennies on the dollar from their investment.

Of course, creditors might not have gotten much more if they would have waited, but the forced sell played into the hands of AT&T Broadband, which got a great deal on a nationwide network of equipment for a bargain price at $135 million.

@Home and Promethean officials were unavailable for comment.