A group of disgruntled ExciteAtHome shareholders, including former employees, is fighting the company's bankruptcy starting with its proposed asset sale decision scheduled for Monday.
The group, led by a seven-member executive committee, calculated the company's worth is closer to $3 billion than the $307 million AT&T is offering for its assets, and that the company could continue and become profitable with a few adjustments.
AtHome "is worth a lot more than what AT&T is trying to get away with," argues Bob Garrity, one of AtHome's first 40 employees. Garrity, who was cable operations manager at AtHome and now is on the 220-member group's executive committee, now runs a nonprofit organization he founded in the San Francisco area and works on investing the money he cashed out with from AtHome.
"Either intentionally or through bad management, (ExciteAtHome) has been driven into the ground," he accuses.
An ExciteAtHome spokeswoman was not available to respond to Garrity's assertions by CEDaily's deadline.
The group alleges AtHome's first mistake was buying Excite, followed by not dumping the portal when financial danger signs first appeared. The cable access industry is thriving, generating $500 million a year, Garrity says, pointing out that, had AtHome dumped the portal and focused on the cable access business, bankruptcy wouldn't have been necessary.
He also cites the $185 million loan in July from a "lender who is known as a last resort," and one for $85 million from AT&T from leased backbone, that led the company to say it would be funded until the end of the year. A few weeks later, he says, the company changed its outlook.
Garrity cites other cases where the company appeared to have funds, but claimed it was in danger of running out. He also says AtHome received a $200 million stock swap offer for recently closed subsidiary MatchLogic, which he says it turned down. That prompted a VP to quit, he says.
"It really seems clear to us that it was a manipulated situation," he says.
The group also takes issue with AtHome's March 2000 agreement with Cox and Comcast that allowed the two to get out of their contracts earlier than first agreed. Garrity says the two were contracted through 2006, and had the original agreement held, AtHome would have been more successful.
The group's representatives plan to attend proceedings on the asset sale. If the judge doesn't approve the sale, Garrity's group will form an equity committee, which would be on an equal level as the creditors' committee. It would then work with the creditors' committee, he says, to demonstrate how the company could be reorganized and made profitable.
The group has a plan for profitability, but ExciteAtHome gets the first crack at submitting a plan, under bankruptcy rules. The group modeled its plan off one executed by Covad Communications, which Garrity says, worked with its creditors.
Garrity's plan for profitability centers on shutting down Excite or scaling it back to focus on the cable access arm. It would also revisit the Cox and Comcast contracts and look for new management. The group already has in mind a few who "would do well running the company," he says.
If the asset sale is approved, Garrity says the group will "have to look at a civil action" against ExciteAtHome's board, AT&T, Cox and Comcast, he says.
Excite reported today that AT&T has removed C. Michael Armstrong, retiring AT&T Broadband chief Dan Somers, Fran Ianna and Charles H. Noski from its board, and irrevocably relinquished its rights to replace the board members, or to appoint others or represent a majority on the board. The changes take effect Oct. 1.