The roller-coaster ride local multipoint distribution services provider Teligent Inc. is on took an unwelcome dip last week when the company announced it cut 900 jobs, or approximately 38 percent of its work force.
On Tuesday the company also must show definitive documentation that it has obtained $350 million in additional funding, or it will be in violation of its bank lending agreements. What happens to the company if it cannot pull together the money is up for debate, but a likely scenario could include Teligent filing for bankruptcy.
Tita Thompson, spokeswoman for Teligent, would not comment on the bankruptcy speculation, but did say Teligent is going to be making some changes.
“We will be re-evaluating our service in certain markets and making decisions regarding the provision of service in those markets. This is part of a broader plan to size up our operation so that we only have a strong profitable business going forward,” Thompson said.
Teligent’s creditors have been kind while the company has scrambled to find more money and remain operational. The creditors originally required Teligent to deliver documentation regarding the $350 million by April 30, but extended the deadline to May 15.
The leniency may have been given in part because IDT Corp. bought up sizable amounts of Teligent stock from Liberty Media Corp. and Hicks, Muse, Tate & Furst Inc., making IDT the majority shareholder and essentially the master of Teligent’s fate. IDT also replaced Alex Mandl, chairman and chief executive officer of Teligent, with one of its own, Yoav Krill, the managing director of IDT’s European division.
IDT purchased 33.7 percent of Teligent from Liberty Media, and 219,998 shares of Teligent’s series A convertible preferred stock from Hicks Muse.
Teligent stayed a course of rapid expansion since launching in October 1998, even boasting about its “record-setting launch” of local markets. At one point Teligent said it offered wireless broadband service in 43 U.S. markets, but the numbers painted a less flattering picture.
Those 43 markets yielded only 35,500 customers at the end of 2000. The company reported revenues for the fourth quarter and year ended Dec. 31 of $15.5 million and $152 million, respectively, which barely made a dent in the company’s losses of $260 million for the fourth quarter and $808 million for the year. Teligent lost $529 million in 1999.
This latest round of layoffs will affect people across the company, Thompson said, and others are expected to leave as IDT gains more and more control of Teligent’s interests.
