Toronto -- BCE Inc. announced today that it will cease further long-term funding to Teleglobe Inc. The company says...
April 24, 2002
Toronto — BCE Inc. announced today that it will cease further long-term funding to Teleglobe Inc. The company says this decision is based on a number of factors, including: Teleglobe’s revised business plan and outlook with associated funding requirements; an assessment of Teleglobe’s prospects; and a comprehensive analysis of the state of the industry.
BCE provided C$550 million (US$350 million) of funding since December 2001. The company it will now provide only short-term periodic funding — up to a maximum aggregate amount of between US$100 million and US$125 million — so that Teleglobe can provide continuing customer service and fund other operations-related needs while it reviews its future options.
BCE issued a statement stating that the revised outlook provided by Teleglobe’s management “no longer meets the objectives of break-even free cash flow by 2003 and the prospect for “value recovery” of this investment, and the market prospects for data are not expected to improve in the foreseeable future.”
Teleglobe Inc. today announced that in light of the decision by BCE, the company is now pursuing a range of “financial restructuring alternatives, potential partnerships and business combinations.”
“Like many others in our industry, we are affected by the structural over-capacity and continuing price collapse,” said Charles Childers, Teleglobe’s president. “We are facing these issues head on, and pursuing all viable options. During this period we expect to continue to satisfy our customers.”
To reach a rapid resolution of its situation the company says it has taken the following steps:
– retained an investment banking firm to assist in the evaluation and pursuit of all viable options;
– accepted the resignation of all BCE-affiliated board members and appointed Paul Farrar and J. Bruce Terry, to join H. Arnold Steinberg as independent members of its board;
– announced plans to retain Crossroads, LLC, an international consulting firm, to advise the company as it evaluates restructuring initiatives. John G. McGregor, Principal, will be the lead consultant.
Teleglobe also said that it anticipates discussions with its banks and bondholders to keep them apprised of the process.