Covad Gets $150 Million Infusion From SBC

Communications Today, Nov 15, 2001

Four-year-old Covad Communications, which has been operating under Chapter 11 bankruptcy protection since August, announced Tuesday that it has secured $150 million in loans and other financing from SBC Communications [SBC].

Covad said in a statement that the deal would fully fund the Santa Clara, Calif.-based digital subscriber line provider until it becomes cash positive, which it expects to happen by the "second half of 2003."

The terms of the agreement are fourfold:

* A one-time $75 million prepayment, secured by Covad assets, that SBC can use toward the purchase of Covad services during the next 10 years. The agreement does not limit the amount of services that SBC can purchase.

* A $50 million four-year loan secured by Covad assets. Interest payments will be deferred for two years.

* Payment to Covad of a $10 million restructuring fee in exchange for Covad eliminating SBC's revenue commitments under the original resale and marketing agreement.

* The elimination of a $15 million co-op-marketing fee, which was required in the previous resale and marketing agreement, owed by Covad to SBC. >TK Yahoo [YHOO]: SBC Communications [SBC]: