Excite dumped by Cox and Comcast; finds financial advisors
ExciteAtHome's financial saga continues today, with a formal termination notice from Cox and Comcast regarding their exclusivity agreement. The company also says it's retained an investment banking firm to help explore its options, even as it faces today's deadline to muster up $50 million for a couple of dunning investors.
Cox and Comcast notified Excite that they would terminate their agreement effective June 4, 2002. Excite has had an agreement with the two to act as their exclusive ISP. Excite says in a statement it's continuing discussions with both regarding keeping its service running over their cable systems.
Cox spokeswoman Laura Oberhelman confirmed the company sent a notice terminating the partnership. The agreement already was set to expire in December of this year, she says, leaving Cox the option to use other ISPs or renegotiate with Excite, or both.
"We very well may negotiate with (Excite) between now and June," she says.
While Excite's financial problems accelerated the decision, Oberhelman says part of the decision stems from Cox's initiative to manage more elements of its service. The far-off deadline stems from certain legal issues, she says, but also allows Cox to gradually unravel the partnership and arrangements and move more elements in-house for Cox to manage. Cox may opt to enter into an agreement with another ISP or set up its own system, but Oberhelman says its service won't be interrupted.
Excite spokeswoman Stephanie Xavier says the company already knew the two would terminate the relationship, "And that's why we've been negotiating. It's a complex relationship and we're still negotiating," she says, adding that, "We aren't proving any guidance on how this will impact the company."
The company does face a $50 million payment due today in response to a dunning notice sent by two of its investors. Excite disputes the demand.
"There's no news or developments to report today," Xavier says. Asked what the company will do if nothing can be worked out with investors or if there's a plan B, she says Excite isn't "talking about what our options are."
The two holders, investment funds managed by Promethean Investment Group LLC, gave the company an Aug. 31 deadline for payment. Excite says the notes were issued June 8. Promethean says Excite breached representations stemming from the time the notes were issued. Excite disputed the breach charge and the "contention that the notes may now be declared due and payable." At that time, Excite said paying the notes by the due date would have a materially adverse impact on its liquidity and ability to fund operations.
Earlier this month, Excite expressed doubt in a filing about its ability to remain a going concern. Its auditor, Ernst & Young, issued a similar concern in the same filing, and was promptly fired. Excite had raised $100 million in convertible notes, but the terms require it to keep its common stock trading. The broadband services provider faces delisting from NASDAQ, and yesterday, its stock closed at 52 cents a share.
Separately, Excite says it has received board approval to retain an investment banking firm as a financial and restructuring advisor to help explore its financial options. Xavier says she can't disclose who potential advisors are, but notes, "We're looking to hire someone. As soon as that's practical, we want them to come on board."