RealTime IT News

Covad's New CFO: Is He Their Savior?

Digital subscriber line (DSL) provider Covad Communications , fresh from its recent debt reorganization in the courts, is now ready to set its financial operations to rights.

To do so, the troubled data competitive local exchange carrier (DLEC) on Monday named Mark Richman its new chief financial officer. Richman, a man known for his ability to raise capital funding, is going to need to put those money-raising skills to work immediately.

Covad, the largest independent DSL provider in the U.S., has been unable to manage enough of a profit from its number three ranking in America to keep it out of financial trouble.

In August, the DSL provider was forced to file for Chapter 11 bankruptcy in Delaware, and quickly pressed its reorganization scheme to bondholders. By exchanging its bonds for stock, Covad was able to wipe out $1.4 billion in long-term debt.

Charles Hoffman, Covad president and chief executive officer, said he is confident that Richman is the person who can use the breathing bondholders gave the provider to make the company profitable.

"Mark brings proven experience and leadership in a broad range of financial operations and in the development and management of strong operating controls and processes," Hoffman said. "He also brings in-depth experience in areas imperative to Covad, such as financing activities and bond transactions."

Although Richman arrives at Covad from his previous post at Internet-through-power-meter company MainStreetNetworks in Morgan Hill, CA, Covad executives were more impressed by the skills he garnered at Adecco U.S., where he was vice president of finance and administration.

While there, he raised more than $3 billion in funding through debt and equity transactions. Previous to Adecco, Richman spent the early stages of his 18 years in the financial community at Manufacturers Hanover Trust Company and Wells Fargo Bank.

His arrival comes at a crucial time. While many analysts believe Covad can turn things around, the provider's fate is still up in the air -- a tepid second quarter report and continued trading on the Over-the-Counter Bulletin Board doesn't make recovery a given.

The report also showed, though, that the company has a fighting chance.

Covad still continues its path of acquisition, a less-expensive option to organically growing a DSL subscriber base. With more paying customers, i.e., more recurring revenues, investors will have more incentive to bankroll the $200 million officials hope will bring Covad cash flow positive by the end of next year.

Richman and Covad officials were not available for comment on the selection process, or whether Richman was the DLECs first choice to helm its financial turnaround.