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.
