As expected, Teligent Inc. voluntarily filed for bankruptcy last week following a long and tedious demise that included debt extensions, layoffs and management shake-ups.
Vienna, Va.-based Teligent said it filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of New York with the intent of reorganizing its capital structure, while still offering broadband voice and data services.
“Our goal is to emerge from this reorganization with the appropriate cost framework to allow us to maximize the value of our nationwide network, positioning the company for significant future growth,” said Yoav Krill, chief executive officer of Teligent.
The company’s latest and final debt extension came May 14 when its creditors, including The Chase Manhattan Bank, Goldman Sachs Credit Partners and Toronto Dominion Bank, granted a second waiver to an amendment and consent to its credit agreement. The creditors originally required Teligent to deliver documentation regarding $350 million in additional funding by April 30.
Just a few days prior, on May 11, Teligent announced it was laying off approximately 900 employees, or 38 percent of its work force, and Nasdaq said it was halting trading of Teligent stock. Shares of Teligent last traded at 56 cents.
Also around that time, IDT Corp. swooped into the picture and bought up significant amounts of Teligent stock from Liberty Media Corp. and Hicks, Muse, Tate & Furst Inc., making it the majority shareholder. Alex Mandl, then chairman and CEO of Teligent, resigned and was immediately replaced with Krill, who was the managing director of IDT’s European division.
In filings with the Securities and Exchange Commission, IDT has said it intends to merge Teligent with another competitive local exchange carrier, ICG Communications Inc., which also recently filed for bankruptcy. IDT provides long-distance and calling card services, and could roll the assets of Teligent and ICG into its business to offer a wider selection of services.
Teligent has network equipment deployed in 43 markets across the country.
Teligent was the last of the three big local multipoint distribution service carriers in the nation to buckle under the bear market that has overwhelmed almost the entire technology sector during the past six months. Advanced Radio Telecom Corp. filed for bankruptcy March 30, and Winstar Communications Inc. sought Chapter 11 bankruptcy protection April 18 after it failed to make aggregate payments of approximately $75 million on loans.
Winstar continues to search for debt relief, and on May 14, the U.S. Bankruptcy Court for the District of Delaware issued a final order approving the terms of its debtor-in-possession bank facility, which has an initial availability of up to $75 million, and which may be increased to as much as $300 million upon the satisfaction of certain conditions.
Winstar is in the early stages of a $10 billion lawsuit against Lucent Technologies Inc. for “breach of obligations.” Winstar claims this breach is what caused the company to go bankrupt after Lucent failed to pay Winstar $90 million. Winstar needed the money to pay back several creditors.
The lawsuit is unusual in that Lucent was among the creditors Winstar was supposed to pay back.
Lucent has stated the lawsuit is without merit.
