Phone, cable and broadband service provider RCN has filed for Chapter 11 bankruptcy protection to get out from under crushing debt.
The Princeton, N.J., company said customers will not experience any service disruptions.
If the restructuring goes as planned, the Princeton, N.J., company would slash the amount it owes creditors from $1.66 billion to $480 million and emerge in the fourth quarter.
An RCN spokesman was not immediately available for comment. In a statement,
RCN Chairman and CEO David C. McCourt called the move “positive news for
RCN employees and customers.”
“We continue to believe that our strategy of selling bundled services over a
broadband network will define the future of the industry,” McCourt said.
“This has been proven true over the last several months as competitors
continue to emulate our strategy.”
RCN was founded in 1997 and serves metropolitan markets in California,
Illinois, Massachusetts, New York and Pennsylvania. It also owns half of
Starpower, an Internet service provider serving the Washington, D.C., area.
(Pepco Communications owns the other half of Starpower).
It competes in a packed field, going head-to-head with well-heeled cable
providers including Comcast and regional telecoms such
as Verizon .
As part of RCN’s restructuring plan, the company has negotiated new
financing to kick in after the reorganization. It includes a nearly $460 million loan and credit line from Deutsche Bank.
RCN, which was on an acquisition spree in the late 1990s to establish its footprint, hopes to exit Chapter 11 bankruptcy protection in the fourth
quarter.
RCN investors include Level 3 Communications , a
Broomfield, Colo., network operator.