In another blow to financially troubled ExciteAtHome, two major cable companies said Friday they will terminate their partnerships with the high-speed Internet provider.
Comcast Corp. and Cox Communications Inc. said they will exercise the right to exit from their agreements effective June 4.
The end of the deals does not mean the companies' cable modem customers will lose access. Rather, Comcast and Cox are likely to take over some operations themselves and find new partners for others.
Comcast, Augusta's largest cable operator, said exercising the exit provision was in the best interest of customers and shareholders in light of reports on ExciteAtHome's financial condition.
Both Comcast and Cox also are in discussions with ExciteAtHome about forming new, more limited agreements.
"That being said, we will have 950,000 customers by year end and we need to ensure that they continue to be well-served," said Steve Burke, the president of Comcast Cable.
BUT IT REMAINS to be seen whether Redwood City-based ExciteAtHome will survive into next year. The once high-flying company said in August that its independent auditors expressed doubt about its viability.
The latest crisis was the result of $100 million in convertible notes sold by ExciteAtHome in June to stave off another cash crunch. Promethean Investment Group LLC, which bought half the notes, later said ExciteAtHome misrepresented its financial condition and how long the money would last. On Monday, Promethean demanded a $50 million payment by Friday.
"We don't think there's merit in this call for the loan," said Stephanie Xavier, an ExciteAtHome spokeswoman. "We're not paying the money today, and we're in active discussions with them about the call."
Still, the $50 million is just a fraction of the $1 billion debt load carried by the company.
AT&T Corp., which is both a cable partner and controlling shareholder, has not made its intentions known. AT&T did not immediately return a call seeking comment. Some analysts say AT&T or another investor might make a last-minute bailout.
ExciteAtHome announced Friday that it has hired an investment banking company as a financial and restructuring adviser. The company, which it did not identify, will assist the company in "exploring its options related to its financial position," according to a statement.
AT&T, COMCAST and Cox are the three largest of the 21 cable systems that use the service. ExciteAtHome currently has 3.7 million subscribers nationwide, Xavier said.
The company, which also operates the Excite Web portal, has been hard hit by the downturn in Internet advertising and questionable management decisions.
ExciteAtHome provides e-mail, some content and the network backbone for cable modem users.
During the Internet boom, management sought to boost revenues by acquiring or merging with other companies, including the $6.7 billion Excite deal and $780 million for an online greeting card company.
Despite high hopes, the dot-coms did not pay off.
After losing $7.4 billion in fiscal 2000, ExciteAtHome said in April it needed to raise $75 million to $80 million to make it through 2001.
In addition to the $100 million in notes, ExciteAtHome raised $85 million in June by restructuring the lease of its fiber-optic network from AT&T Corp. Even so, the company said in July that it needed more cash to stay in business in 2002.
The company's stock was down nearly 25 percent, or 12 cents, to 40 cents a share in Friday trading on the Nasdaq Stock Market. It was trading at more than $100 at the time of the Excite merger.
© 2018. All Rights Reserved. | Contact Us