PracticePeople In PracticeBankruptcy threat grows at Excite@Home

Bankruptcy threat grows at Excite@Home

Excite@Home, the high-speed internet access company, is to file for Chapter 11 bankruptcy, according to reports from the US.

Telecommunications giant AT&T, which owns a 23% stake in Excite, may bid for the broadband assets to ensure high-speed internet access for its cable customers is not disrupted.

A report in the Wall Street Journal, said AT&T would bid between $250m (Pounds 169m) and $300m (Pounds 203m) for the assets, adding that it expected Excite@ to file for bankruptcy within the next fortnight.

One US analyst told the paper: ‘In my view, [bankruptcy is] inevitable. The only way you’d take over that company is if it went into bankruptcy court and an acquiring company could pay 10 cents on the dollar. There’s a potential that AT&T could take over the company after negotiating in court, but even that’s not a sure thing.’

In addition to a large debt burden of $1bn (£677m), Excite@Home, is reported to be struggling from lack of cash.

On Tuesday the company announced it would close MatchLogic its interactive marketing services to lower operating costs after selling off its interest in its Australian arm to trading partner Optus. Furthermore, plans are now in place to downsize its staff by approximately 500 employees over the next three months, representing a 25% reduction in its workforce.

Earlier this month chief financial officer Mark McEachen resigned, while in August Excite@Home sacked its auditors, Ernst & Young, after the firm expressed doubts over the dotcom’s ability to continue as a going concern. PwC has since been taken on board.

One investor, Promethean Asset Management, demanded Excite@Home return half the $100m (Pounds 67m) it gave the company in June, claiming that the company had failed to disclose the severity of its financial position.

Trouble at the company began when advertising revenues began falling following the downturn in the online market.

Shares in Excite@Home were last trading at 17 cents each, 10 cents down on yesterday’s closing price.

Links

Excite@Home CFO resigns

Excite@home drops auditor E&Y

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