Amid class-action lawsuits, complaints of service and management turmoil,
ICG Communications Inc. this week filed voluntary petitions for Chapter 11
protection with the U.S. Bankruptcy Court for the District of Delaware.
The telephone services and infrastructure provider secured a $350 million
loan from Chase Manhattan Bank, $200 million of which is available
immediately. The remaining $150 million will be made available upon the
satisfaction of certain conditions. ICG also said it has about $160 million
cash on hand.
ICG will continue to maintain normal business operations for its nearly
10,000 customers nationwide, providing all products and services in
accordance with regulatory requirements.
“This is a strategic step taken by the company as part of its on-going
efforts to restructure and ultimately strengthen the company’s balance
sheet,” said Randall E. Curran, chief executive officer, ICG. “We believe
we’ll be able to reposition ICG to be a profitable and competitive company
well into the future.”
Curran also said he believed his company had enough money to continue
operations and move forward.
Curran inherited ICG’s troubles in September when he took over for Carl E. Vogel, who had filled the position by ousted Shelby Ryan.
Though Chase Manhattan has come to ICG’s rescue, one has to wonder if the
firm is an attractive element for larger firms to pick it up. Once an Wall
Street favorite who enjoyed a market capitalization of $2 billion and shares
that traded as high as $32.95 last March, trading for shares of ICG was halted Tuesday at 31 cents.
Yankee Group’s Joanna Makris, program manager of Communications Services for
the New Economy, had said in September acquisition is a definite
possibility, but declined to speculate as to who exactly is interested.
Makris said firms looking to build out their dials assets would make ICG
very attractive. She also said that despite a litany of disgruntled
customers, many of the major Internet service providers have been
appreciative of ICG’s service.
“There are serious concerns. It signals a harbinger of doom for
voice-oriented CLEC’s who haven’t turned around,” Makris said.
While that certainly may have been the case two months ago, November saw the
NASDAQ dip below 3000 for the first time since the same period last year.
Upon studying the markets, some analysts assert that competitive local
exchange carriers like ICG aren’t the only firms adversely affected by
shrinking venture capital and waning investor confidence.
Michael Lehmann, an economics professor at the University of San Francisco,
told InternetNews.com Tuesday the combination of companies pulling IPOs,
massive layoffs and streamlining is an early indication that the market
could be headed for a recession.
“I look at high-tech as the leading edge,” Lehmann said. “My guess is that
we’re in for a dry spell. New firms are having difficulty getting funding
because venture capital is drying up. Other straws on the camel’s back are
that oil prices are high, and costs are going north while revenues are going
south.”
