Bankruptcy Court Approves XO Reorganization Plan

Communications Today, Nov 18, 2002

A bankruptcy court judge on Friday approved broadband backbone service provider XO Communications' [XOXO] restructuring plan that gives financier Carl Icahn a controlling position in a reorganized company. Under the deal, Icahn, who holds a large portion of XO's debt, is in line to swap that for an 80 percent stake in new XO stock. Overall, the restructuring agreement provides that the holders of XO bank debt will receive 95 percent of the equity in a reorganized XO, and $500 million in junior secured debt. This past month, XO agreed to release buyout firm Forstmann Little & Co. and its partner from a deal to invest $800 million into the troubled company. Under that settlement, Forstmann Little and Mexican telecom giant Telefenos de Mexico [TMX] each consented to pay XO $12.5 million to release them from any claims related to the original investment agreement. The bankruptcy court Friday also signed off on that termination agreement.

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