Arkansas based company considers Williams Communications buyout
Thursday, May 9th 2002, 12:00 am
By: News On 6
A private Arkansas firm says it will submit a bid to acquire bankrupt Williams Communications, but the wholesale broadband provider says it's not for sale.
Little Rock-based GlobalAxxess Holdings LLC said Wednesday it wants to obtain all of Williams stock in exchange for its own shares and then take the company public in two years.
The company, which is backed by offshore capital, said it wants to combine the fiber-optic network of Williams to those of bankrupt telecoms Global Crossing of Beverly Hills, Calif., and Viatel of London.
GlobalAxxess Chief Executive Karl Schwarz said the deal makes sense because combined revenues of the consolidated companies could overcome the difficulty each had in generating cash flow.
But Tulsa-based Williams said the company's restructuring and equity division will be decided by the bankruptcy court in New York, and it would be ``irresponsible for any party to imply otherwise.''
``In accordance with lockup agreements with key creditor groups, Williams Communications is moving forward on its plan for reorganization under Chapter 11, which does not include selling the company,'' Williams Communications said in a statement.
Williams filed for bankruptcy on April 22 after taking on more than $7 billion in debt while building a 33,000-mile fiber optic network. After broadband prices plummeted, the company could no longer generate enough cash to meet interest payments.
The company filed for court protection under a deal dividing its remaining equity between bondholders and its former parent company, Tulsa-based energy firm Williams Cos.
About 490 million outstanding Williams Communications shares will be wiped out in the reorganization. The proposal by GlobalAxxess would provide shareholders with at least some return on their shares, which about two years ago were trading at more than $40.
Stockholders cautiously welcomed a bid by GlobalAxxess.
``We latch onto any ray of hope,'' said stockholder Phil Redman. ``The deal sounds very interesting on the surface. But it's got a lot of caveats, a lot of so-called 'forward-looking statements.'''