Beautifully engraved certificate from XO Communications
. This historic document was printed by the Security Columbian Banknote Company and has an
ornate border around it with a vignette of the company's logo. This item has the printed signatures of the Company’s President (Dan Akerson) and Secretary.
The company's stock was around $65 in March 2000 and now is hovering around $0.07. They said they had sufficient cash to survive at least into mid 2003 without the need for further financing, yet the company recently sold out their shareholders with a financing that wiped out their shareholder equity. The trading of their shares were immediately halted on the NASDAQ and they have been delisted.
In July 2009, Dan Akerson was named to the board of directors of General Motors as a representative of the U.S. Treasury, which owns a 61% stake in GM. On August 12, 2010 it was announced that Akerson will be the successor of Ed Whitacre as CEO of General Motors, starting September 1, 2010 and will also assume the Chairman of the Board position on January 1, 2011.
RESTON, Va.--June 17, 2002--
Parent Company to Reorganize Under Chapter 11 -- Alternate Tracks
Contemplated, Either Would Result in Successful Reorganization;
Operating Subsidiaries Not Included in Filing; Company Has
More Than $500 Million Available to Fund Operations
Through Financial Restructuring
XO Communications, Inc. (OTCBB:XOXO) announced today that it has taken an important step necessary to implement a balance sheet restructuring and has filed a voluntary petition to reorganize under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York.
The Chapter 11 filing is limited to the parent corporation, XO Communications, Inc. No operating subsidiaries of XO are part of the filing. Accordingly, the filing is not expected to affect the subsidiary operating companies' relationships with customers and vendors. XO does not expect any reductions in workforce or facility closings as a result of the filing and will continue to pay employees and provide employee benefits without interruption during the reorganization. The filing was made following lengthy negotiations with various potential investors and XO creditor constituencies in which a number of alternative investment and restructuring transactions were proposed and considered.
Concurrent with the Chapter 11 filing, XO submitted a two-pronged plan of reorganization that includes two alternative restructuring scenarios, both of which are intended to result in a successful reorganization and restructuring of XO's balance sheet. The first would implement the transactions described in the previously announced investment agreement with Forstmann Little & Co. ("Forstmann") and Telefonos de Mexico S.A. de C.V. ("TELMEX") (the "Investment Agreement") if it is completed. This action to proceed with the Investment Agreement is also taken with the support of lenders representing more than a majority of the loans outstanding under XO's $1 billion secured credit facility. To complete the transaction certain conditions must be met. Forstmann Little and Telmex have recently said that they believe that these conditions will not be met and have asked XO to consider terminating the agreement. XO currently has no plans to terminate the Investment Agreement and, as previously announced, does not believe that Forstmann and Telmex are entitled to terminate the agreement unilaterally.
However, because the Company cannot be certain whether all of the conditions to closing the Investment Agreement will be satisfied, the plan of reorganization also includes a stand-alone restructuring plan that XO plans to implement if the Investment Agreement is not consummated and if a superior alternative is not presented to the Company. This stand-alone plan provides for the conversion of the $1 billion in loans under the secured credit facility into common equity and $500 million of pay-in-kind junior secured debt. The informal steering committee of lenders under the secured credit facility has indicated that it is prepared to support, and recommend that the lenders under the secured credit facility approve, the stand-alone restructuring subject to the preparation of definitive documentation and the completion of customary internal bank approval processes.
The stand-alone plan permits the Company to seek to obtain additional funding needed for its business plan by issuing common equity through a $250 million rights offering to be made to the Company's senior unsecured creditors and, to the extent that the offer is not fully subscribed by the senior unsecured creditors, to the holders of the Company's subordinated debt and preferred and common stock. Additionally, it permits any shortfall to be covered by up to $200 million in new senior secured loans ranking senior to the new junior-secured debt, although no agreements for this financing have been reached.
"We are gratified that our secured lenders have the vision and confidence to see beyond today's troubled times and to recognize the potential long-term value of our company," said Dan Akerson, XO's Chairman and Chief Executive Officer. "We believe that our Investment Agreement with Forstmann Little and Telmex continues in full force and effect and provides for better overall economic recoveries for our creditors. While we have every intention of enforcing our rights under this Agreement we are also prepared to move forward with a standalone plan that provides clarity and assures our customers, vendors and employees that the company is moving forward with a plan that will achieve our goal of restructuring our balance sheet and provide the necessary financial stability for the company to emerge as a strong and viable competitor in the telecommunications industry."
Because the Chapter 11 filing directly affects only XO Communications, Inc., and not its operating subsidiaries, XO will conduct business as usual with regard to its customers and will continue to provide its customers with innovative broadband communications solutions and services throughout the United States. During the reorganization process, vendors, agents and others who conduct business with XO's operating subsidiaries are expected to be unaffected. The smaller group of XO vendors dealing directly with the parent corporation will be subject to the Chapter 11 process and will receive additional information as part of the process.
"This financial restructuring and the related Chapter 11 filing are not a result of operational issues, but are driven by a need to deleverage the Company and resolve our balance sheet issues," commented Akerson. "Simply stated, the Company has too much debt, given the current and projected level of business operations."
Since XO announced its initial restructuring plans in November 2001, XO has continued to effectively add new customers and serve its existing customers, and has reported consistent operational results despite a difficult business environment. During the fourth quarter of 2001 and continuing in 2002, XO implemented a series of expense reduction and cash conservation initiatives. Late last year, XO also disclosed that it would not make cash interest and dividend payments on its unsecured notes and preferred stock beginning on December 1, 2001. XO noted that its improving trend in EBITDA loss and its recent completion of several significant non-repeating capital projects are expected to result in a further decrease in the rate at which it is using its available cash for the remainder of 2002.
Accordingly, assuming revenues remain generally consistent with current levels in the near term, continued reductions in uses of cash consistent with recent trends and continued nonpayment of cash interest and dividend amounts during the proposed recapitalization process, XO currently estimates that the approximately $555.0 million of cash and marketable securities on hand as of April 30, 2002 will be sufficient to fund its operations while the bankruptcy case is pending.
As noted in the Company's prior disclosures, because the company's senior unsecured creditors are not receiving full value for their claims under either of the restructuring alternatives contemplated by the plan of reorganization, the proposed plan of reorganization does not provide for any recovery by the holders of convertible subordinated notes or existing XO equity and equity related securities, including XO common and preferred stock, and outstanding stock options. The stand-alone plan, however, contemplates that rights to purchase common stock of reorganized XO will be granted to holders of senior unsecured notes and, to the extent these rights are not exercised fully, to holders of subordinated notes and outstanding preferred and common stock.
The proposed plan of reorganization and the related disclosure statement are subject to the approval of the bankruptcy court and to the approval of the Company's principal creditor groups. Taken as a whole, the Investment Agreement, the alternative stand-alone plan, the agreements evidencing the support of the Company's senior secured lenders and the other terms of the proposed plan of reorganization establish a framework for the Company's anticipated Chapter 11 plan with the proposed or additional alternative ultimately selected being determined in the Chapter 11 process.
About XO Communications
XO Communications is one of the nation's fastest growing providers of broadband communications services offering a complete set of communications services, including: local and long distance voice, Internet access, Virtual Private Networking (VPN), Ethernet, Wavelength, Web Hosting and Integrated voice and data services.
XO has assembled an unrivaled set of facilities-based broadband networks and Tier One Internet peering relationships in the United States. XO currently offers facilities-based broadband communications services in 65 markets throughout the United States.
Craig McCaw founded NEXTLINK Communications in 1994 and is its principal shareholder. Following the merger of NEXTLINK and Concentric in 2000, McCaw now serves on the XO™ board, and remains directly involved in the strategic direction of the company.
McCaw is a wireless pioneer and was a widely respected leader in the telecommunications industry. He built McCaw Cellular Communications, Inc., from a startup into the country's largest provider of wireless communications services. In 1994, McCaw Cellular merged with AT&T for $11.5 billion, at the time becoming one of the largest mergers in U.S. business history. Prior to founding McCaw Cellular, McCaw built a family-owned, cable TV company into the nation's 20th largest cable operator. In March 1994, Mr. McCaw and Microsoft chairman Bill Gates formed Teledesic Corporation to offer broadband communications worldwide via low earth-orbit satellites.
Dan Akerson is Chairman and Chief Executive Officer of XO™. Prior to his current role, he gave up the CEO title at Nextel on July 14, 1999 when he became an investor in and co-chairman of Eagle River, Inc., a holding company controlled by telecommunications pioneer Craig O. McCaw.
Prior to joining Nextel in 1996, Akerson served as general partner of Forstmann Little & Company, a private investment firm, from 1993 March 1996. While at Forstmann Little, he also held the position of chairman of the board and chief executive officer of General Instrument Corporation, a technology company acquired by Forstmann Little.
From 1983 to 1993, Akerson held various senior management positions with MCI Communications Corporation, including President and Chief Operating Officer. Akerson serves as Chairman of NEXTEL and is a director on the boards of the American Express Company and America Online, Inc.
XO Communications have been involved in many lawsuits recently. The defendants include XO Chief Executive Officer and Chairman of the Board of Directors Daniel F. Akerson, President, Chief Operating Officer and Director Nathaniel A. Davis and Craig O. McCaw, the Company's founder, controlling shareholder, and Director. Complaints charges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 by, among other things, issuing false and misleading statements regarding XO's financial condition as well as its present and future business operations. In particular, the Complaint alleges that defendants misled the investing public concerning the Company's ability to finance its business operations until it becomes cash- flow positive. Throughout the Class Period, defendants stated that XO had sufficient cash to survive at least into mid 2003 without the need for further financing. These statements were false, and on November 29, 2001, defendants announced a transaction where the shareholders' equity was destroyed in exchange for a cash infusion of $800 million. Trading in the Company's stock was immediately halted.
On March 13, 2002 XO Communications, Inc. (OTC:XOXO) has rejected a restructuring plan proposed by its bondholders over the weekend that would put the troubled broadband carrier in Chapter 11 bankruptcy. The new plan emerged after billionaire investor Carl Icahn
, who, along with two other investors, holds $1 billion in XO debt, said he was opposed to XO's current plan to have Forstmann Little & Co. and Telefonos de Mexico S.A. de C.V. (TelMex) invest $400 million each in exchange for an 88 percent equity position in the Reston, Va.-based company.
The plan proposed by the XO's bondholders called for the bondholders to invest approximately $600 million in the company and receive in return 100 percent equity in XO in a reorganization that take the company into Chapter 11 protection.
"XO has received a preliminary proposal from certain holders of its senior unsecured notes regarding the terms of a potential financing and restructuring that is intended to replace the investment and related transactions provided for in XO's existing agreements with certain funds affiliated with Forstmann Little & Co. and Telefonos de Mexico S.A. de C.V. (TELMEX)," an XO statement declared. "XO's board of directors, with the assistance of its financial and legal advisors, has carefully reviewed this proposal and concluded that it does not represent a feasible alternative for the successful restructuring of the company. Based on this assessment, the company has elected to reject the noteholders' proposal."
The statement also said XO plans to move "promptly" to implement the Forstmann-TelMex agreement. According to the XO statement, "The Forstmann Little/TELMEX proposed restructuring is clearly superior and will permit the company to complete its financial restructuring and raise the funding needed to secure the company's future."
Following the restructuring, Forstmann Little and TelMex will each own 39 percent of the company's outstanding equity. The remaining equity, other than that allocated to the company's employees, is expected to be held primarily by holders of the company's senior notes. Consequently, current holders of the company's equity securities are expected to lose substantially all of the value of their investment as a result of the restructuring.
XO has had trouble selling that deal, though, and has threatened to file to bankruptcy, perhaps as early as this week, in an effort to pressure stockholders into accepting the Forstmann-TelMex offer.
Icahn stepped into the controversy Thursday night by issuing a press release urging noteholders to reject the XO restructuring plan. XO was quick to counter Icahn's criticism.
"XO has reviewed the press release issued by Mr. Icahn announcing his opposition to XO's proposed debt restructuring in connection with the investment by Forstmann Little & Co. and Telefonos de Mexico S.A. de C.V.," XO responded in its own press release. "As previously announced, XO has reached a definitive agreement under which Forstmann Little and TelMex would invest $800 million in the company subject to the satisfaction of specified conditions including the completion of a balance sheet restructuring."
About XO Communications
XO™ Communications was founded in 1994 by telecommunications pioneer Craig O. McCaw to provide high-quality broadband communications services to businesses over fiber-optic facilities and currently provides these services in 62 markets across the United States.
XO is the largest holder of fixed wireless spectrum in North America, with licenses covering 95 percent of the population in the top 30 markets in the United States. The wireless capabilities of XO will complement and extend the reach of its local fiber optic networks in the markets in which XO has spectrum.
Additionally, XO has acquired exclusive rights to use certain fibers and a conduit throughout a 16,000-route mile high-speed, IP-centric fiber optic backbone network that will connect over 60 cities in the United States and Canada when completed. Through this unrivaled collection of facilities, XO provides integrated, end-to-end telecommunications solutions to its customers.
Not married to any single network technology, XO employs the best access tool for the job for reliably and competitively delivering world-class broadband services to customers. One of the world's fastest-growing broadband communications companies, XO is a leader in the revolution that is successfully transforming the Internet into a viable integrated global communications system for the 21st century. Leveraging its strengths, XO initiated the start of a unprecedented approach to communications services with the world's first flat-rate local, long distance, Internet access, and Web hosting package, called XOptions™.
Formed by the merger of telecom company NEXTLINK Communications and business data services provider Concentric Network Corporation, XO Communications offers local and long distance voice, data, and Internet services throughout the U.S. XO has an unmatched array of facilities-based, high speed access technologies that can deliver abundant bandwidth through the last mile. While evolving the company from two separate companies and brand names associated with two different capability sets, XO stands for the inclusive voice and data product suites and customer service that are the legacy of both NEXTLINK and Concentric
Local and long distance voice communication services
Digital Subscriber Line (DSL) access
Web hosting and e-commerce services
Virtual Private Networks (VPNs)
Dedicated Internet access
Global transit and application infrastructure services for delivering
applications over the Internet or a VPN
Ethernet services including local area network (LAN) interconnectivity with 10 Mbps, 100 Mbps, 1 Gbps
Metro Wavelength Services which offers customers a protected and dedicated 2.5 Gbps connection between multiple sites on a single XO Metro fiber network.