Broadwing Leaps 12 Percent on Sale News
Posted on: Wednesday, 26 February 2003, 06:00 CST
Broadwing Leaps 12 Percent on Sale News
Associated Press Tech News
Shares of Broadwing Inc. jumped 16 percent Tuesday after the telecom company said it would sell its broadband business to privately owned C III Communications LLC for $129 million in cash.
Broadwing had acquired the broadband assets for $2.2 billion, plus $1 billion in assumed debt, in 1999.
Broadwing, which is restructuring to reduce its debt, had said in January that it would try to sell the unit, which is known as Broadwing Communications Services Inc. The unit owns fiber-optic lines, a network operations center and other infrastructure for providing high-speed Internet access services.
The deal calls for C III Communications to assume Broadwing Communications' liabilities and retain its current employees and customers. Both companies' boards have approved the deal, which is subject to review by the Federal Communications Commission and state public utility commissions.
C III Communications' investors include Cequel III LLC, an investment and management company based in St. Louis, and Corvis Corp., a telecommunications equipment provider based in Columbia, Md.
Broadwing Inc. will retain a minority interest in C III Communications. Cequel III will take the lead in supervising the new company, which will still operate under the Broadwing Communications name.
Broadwing Inc.'s local communications subsidiary, Cincinnati Bell, will remain a customer of Broadwing Communications, using it to route long-distance voice and data services.
Since October, Broadwing Inc. has announced the elimination of 500 jobs at Broadwing Communications and an expansion of borrowing capacity to pay down debt.
Broadwing's shares rose 65 cents to $4.69 in afternoon trading Tuesday on the New York Stock Exchange.
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