Teligent to Emerge From Bankruptcy

A little more than a year after defaulting on payments to creditors, company emerges debt free with new focus on fixed-wireless services.

by Roy Mark of internetnews.com [September 9, 2002]

Former venture capital darling Teligent, a competitive local exchange carrier (CLEC) and provider of voice, digital subscriber line (DSL), and fixed wireless Internet access that failed to meet a $350 million payment to creditors 15 months ago, will emerge from bankruptcy on September 16, 2002 entirely debt free and with all of its existing fixed-wireless assets intact, including spectrum licenses in 74 U.S. markets.

In a plan approved by the Bankruptcy Court for the Southern District of New York, the company's senior secured lenders have committed to fund Teligent's new business model focused on fixed-wireless spectrum and will own 100 percent of the stock of the restructured firm. Teligent will be privately held and operated by the existing management team that has been in place since May of 2001.

In hopes of leveraging its fixed-wireless experience, Teligent will provide transport services to carriers, point-to-point broadband access services to multi-location businesses, and dedicated Internet connectivity to enterprise companies. The company's service will be utilized for both primary and redundant data services.

"We are extremely pleased to be moving forward with Teligent's emergence and would like to acknowledge the support and loyalty of our creditors, customers and employees," said Jim Continenza, Teligent's CEO. "We are very fortunate to be exiting bankruptcy with state-of-the-art assets and infrastructure entirely debt free and fully funded."

The company made a splash in 1996, when it announced the launch of its integrated voice and data services, especially broadband Internet connectivity, to businesses around the nation. Led by former AT&T Corp. President and CEO Alex Mandl and Laurence Harris, MCI Communications senior vice president of law and public policy, the CLEC immediately started raising capital for a nationwide deployment

In 1998, the company announced a nationwide launch. In 14 months, the company opened its doors to business in 600 cities throughout the U.S. Investors came, pumping more money into the coffers. With more than $500 million from investors and a just-signed $800 million credit facility, the company stepped up the pace of its deployment.

It came to a head with its wireless spectrum deals in Germany, France, Spain, Hong Kong, and Argentina. The combination of expenses from wireless deployment overseas plus data center and DSL rollouts in the U.S., coupled with the end of venture capital in 1999, was enough to put an end to the company's empire-building ambitions.

Cracks in Teligent's armor started to show. Despite nearly 500,000 lines installed by the end of 2000, only 35,500 customers were signed up to voice and land-based data Internet services. It posted an net loss for FY 2000 of $808 million and an EBITDA loss of $436 million, filing for bankruptcy five months later.

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