Banks Grant Second Waiver to Velocita

The fiber optic network builder and service provider gets a second waiver, but the prognosis is not good.

by Roy Mark of dc.internet.com [April 18, 2002]

Velocita Corp., a national broadband networks provider, has reached agreement with a consortium of banks for a second waiver of certain financial covenants in the company's credit agreement. The additional waiver extends through April 30. The original agreement between Velocita and the banks, announced March 28, provided for the waiver of certain financial covenants through April 15.

The second waiver continues to require the Falls Church, Va.-based Velocita to comply with its other covenants in the credit agreement and forego further borrowing under the credit agreement and limits the ability to make certain restricted payments to its affiliates.

During the additional waiver period, Velocita will continue discussions with its bank lenders regarding modification of the terms of its credit agreement. In addition, Velocita will continue to explore strategic relationships and alternatives. If, at the end of the waiver period, the company has not obtained an amendment to, or a waiver under, the credit agreement, the company will be in default with respect to certain financial covenants under the credit agreement.

Founded in 1998 as a facilities-based provider of fiber optic communications infrastructure, Velocita has agreements with AT&T to construct approximately half of AT&T's nationwide fiber optic network.

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