XO Considers Icahn Bid; Bankruptcy Filing Likely
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XO Communications Inc., a money-losing telecommunications company, said it is considering a $500-million bid by financier Carl Icahn for 50% of the company and it may file for bankruptcy protection “in the very near future.”
The Reston, Va.-based company on March 11 rejected a takeover proposal from bondholders led by the financier. It said it planned to implement a competing plan from buyout firm Forstmann Little & Co., led by buyout veteran Ted Forstmann, and Telefonos de Mexico to inject $800 million and receive an 80% equity stake.
XO made the disclosures in its annual report, filed with the Securities and Exchange Commission.
XO also said “it has become clear” that to implement a balance-sheet restructuring necessary for it to run its business, the company “will need to commence a bankruptcy proceeding” and seek a reorganization that will eliminate its current equity and much of its debt.
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