Anxiously seeking a way to shore up its debt before it comes due next year,
Broadwing Tuesday sloughed off its broadband business and
its name in a $129 million deal with C III Communications, a new joint
venture backed by telecom gear-maker Corvis and VC firm Cequel III.
Broadwing was known as Cincinnati Bell before it acquired IXC
Communications in 1999 for $2.2 billion in an effort to expand its local
phone business into the promising long distance and fiber optics arenas.
The new vistas created by the acquisition prompted the company to change
its name to Broadwing and christen the new broadband unit Broadwing
Communications Services.
But the telecom meltdown
of 2002 brought an end to the promise, and less than four years later
Broadwing said it will sell the assets of Broadwing Communications and the
Broadwing name to C III for $129 million in cash.
“This announcement represents a significant step forward in our five-point
restructuring plan, especially given our commitment to strengthening our
financial position and reducing debt,” said Kevin Mooney, chief executive
officer of Broadwing. “We continue to work toward other key objectives,
including renegotiating our current bank credit facility and closing our
previously announced $350 million financing commitment.”
Broadwing will retain only a small consulting group from the Broadwing
Communications unit and a less than 5 percent stake in the business. The
rest, including 18,700 route miles of fiber optic cables, an all-optical
switched network, and a network operations center, will move over to C III.
C III will pick up $375 million of long-term operating commitments.
Broadwing Communications currently provides managed network solutions and
telecommunications services to more than 1,000 corporate customers in 137
of the top 150 markets in the U.S., broadband transportation services to
telecommunications carriers, and long-distance services to more than
150,000 customers.
As part of the deal, Broadwing’s Cincinnati Bell unit will remain a
customer of Broadwing Communications Services and will continue to market
its broadband products to business customers and sell long distance
services, under the Cincinnati Bell Any Distance brand, to residential and
business customers in the Greater Cincinnati market.
The Cequel III venture capital firm is backed by Jerry Kent, who founded
Charter Communications. Lehman Brothers acted as lead financial advisor for
the deal, with Banc of America Securities serving as co-advisor to
Broadwing.
