According to several published reports, a Delaware bankruptcy court has approved a last minute offer from New Jersey-based IDT Corp.
to buy beleaguered wireless telecommuncations company Winstar Communications, Inc., for approximately $38 million. Before the late Tuesday offer, Winstar had been prepared to liquidate.
Winstar, which has its headquarters in New York but has an extensive presence in the Washington, D.C., area with clients ranging from the Securities and Exchange Commission to the FBI and, at one time, more than 2,000 employees in Northern Virginia, filed for bankruptcy in April after missing a $75 million debt payment to Lucent Technologies, Inc.
In its bankruptcy petition, Winstar claimed debts of more than $4 billion.
The IDT offer is reported to be for either $38 million in cash, or $30 million in cash and about $12.5 million worth of IDT’s stock for substantially all of Winstar’s assets. IDT would continue to operate Winstar’s service in addition to prepaying vendors as much as $60 million. Verizon Communications, WorldComm and Williams Communications Group all say they have not been paid by Winstar in weeks, although they continue to provide service to the company.
Repeated calls to attorneys representing Winstar were not returned.
The IDT offer came just hours after a $95 million bid from a group led by former Winstar chairman and chief executive officer, William Rouhana. The bid reportedly included $70 million in cash and a 15 percent ownership stake in the reorganized company.
But Delaware Judge Joseph J. Farnan approved the IDT bid because the IDT offer could allegedly close in 24 hours while Rouhana’s bid would take up to 10 days.
The sale process began on Nov. 21, when Winstar asked the court to schedule an auction on Dec. 10, when the company anticipated running out of cash. At the Dec. 10 hearing, though, the Federal Communications Commission requested that the court keep Winstar operating because of its large federal customers.