WINfirst files for Chapter 11
Copyright 2002 Knight Ridder/Tribune Business News
Copyright 2002 The Sacramento Bee
Just weeks after reining in construction in Sacramento to save precious cash, the parent of cable operator WINfirst on Monday filed for Chapter 11 bankruptcy protection from its creditors.
Company executives said WINfirst will continue to serve its customers in Sacramento while trying to recruit new ones. At the same time, they hope the filing will give them breathing room to reorganize WINfirst's finances and lure new investors.
WINfirst's troubles illustrate the difficulty in entering a market with huge, established players such as AT&T Broadband and SBC Pacific Bell, both of which dominate their respective markets for telephone, cable television and high-speed Internet access.
In multiple filings in Federal Bankruptcy Court in Denver, Western Integrated Networks, which owns WINfirst, listed estimated assets of more than $100 million and debts of between $10 million and $50 million owed to more than 1,000 creditors.
One of those creditors is Bechtel Corp., which has sued WIN for the $9.9 million Bechtel said it is owed for construction in Sacramento.
Under Chapter 11 bankruptcy protection, companies are shielded from creditor lawsuits while they try to salvage their businesses.
Frank Casazza, WIN's president and chief operating officer, said investors had committed to $890 million in equity investment in the company, but several had withdrawn their offers, leaving WIN with little cash for the expensive task of building a fiber-optic network in Sacramento.
While declining to say how much funding WIN actually has received, he said it was substantially less than half the $890 million originally promised.
The Chapter 11 filing, he said, allows the company to overhaul its business plan and hunt for new investors who would be able to buy into the company at a bargain rate.
But experts wonder whether WIN, which had ambitious plans to wire Sacramento and other cities for cable television, high-speed Internet access, and telephone service, can survive.
After spending what's been estimated at hundreds of millions of dollars in Sacramento to build an operations center at McClellan Park and lay expensive fiber-optic cable to homes in the region, the company still has too few subscribers to make a dent in its operating costs.
Late last year, WINfirst shelved rollouts in other cities to focus its remaining cash and prove its concept in the Sacramento market.