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ICG Communications Inc. made official Tuesday what many on Wall Street had been expecting for months: The once high-flying telecommunications company filed for Chapter 11 protection with the U.S. Bankruptcy Court in Delaware. Since its stock fell 54 percent in one day in early September, ICG has been held up as an example of the worst excesses of telecommunications companies that grew quickly during the mid-1990s, only to lose value as investors became aware of the high cost of building and operating broadband networks. Nonetheless, the Englewood, Colo.-based telecom, whose stock closed Tuesday at $0.31 a share, vowed to reorganize its finances and emerge from bankruptcy. To do so, CEO Randall Curran said ICG received $350 million in new financing from Chase Manhattan Bank, of which $200 million would be immediately available. The remainder would be delivered if ICG meets certain conditions. In its filing, the company reported assets of $2.7 billion and liabilities of $2.809 billion. ICG Investor Relations Director Susan Koehler said the company was in the process of both meeting its debts and refocusing its business plan. “We will come out of bankruptcy probably with a little bit more refinement,” Koehler said. “We’re taking a look at our business plan, how we can meet our customer needs better and more profitably.” To arrange its refinancing, ICG was advised by Wasserstein Perella & Co. and law firm Skadden, Arps, Slate, Meagher & Flom LLP. (Wasserstein Perella & Co. is the general partner in a fund that owns The Daily Deal and law.com.) Chase Manhattan’s investment, though, may not be enough to rescue the troubled broadband provider, said Joseph Altobello, a telecom analyst at CIBC World Markets. “That $350 million is not all that much to meet their funding needs,” Altobello said. “To make ICG a viable entity will take a whole lot more money.” ICG’s problems became apparent over the spring and summer when its client Internet service providers, among them Microsoft Corp. complained about poor service. ICG’s business was based on delivering connections between ISPs and the country’s regional telephone companies. On Sept. 18, ICG’s shares fell 54 percent on news that its former CEO, Carl Vogel, and board members Gary Howard of Liberty Media Group and Thomas Hicks of the private equity firm Hicks, Muse, Tate & Furst Inc., had resigned. Vogel had taken over the company just a month earlier when ICG’s founder, Shelby Bryan, was forced out. Like other competitive local exchange carriers, ICG’s growth was fueled largely by the sale of high-yield bonds and venture capital investments. Among them were Liberty Media, a unit of AT&T Corp., which invested more than $500 million in ICG, and the Dallas-based Hicks Muse, which spent more than $230 million on the company. Although both Liberty Media and Hick Muse are among ICG’s creditors, neither firm plays a role in the company’s operations. Copyright (c)2000 TDD, LLC. All rights reserved.

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