New Investments Boost XO Communications

Struggling broadband services provider XO Communications, Inc. on Thursday announced two major new investments in the company totaling $800 million, but also that current shareholders will lose “substantially all of the value of their investment” as a result of restructuring.

Investment firm Forstmann Little and Telefonos de Mexico will each invest $400 million in XO, and each hold 39 percent of the restructured company. The remaining equity, other than that allocated to the companys employees, will be held primarily by holders of the companys senior notes.

In the third quarter of this year, XOs EBITDA losses were $53.5 million. But revenue grew 48 percent compared to the same quarter last year.

XO has a fiber and wireless broadband communications network serving 63 metro markets throughout the United States. The new investments will fund continued development of the network, day-to-day operations and costs of restructuring. The company said it expects to have a fully funded business plan after the new investments.

“We appreciate Forstmann Littles on-going support and are pleased that a significant industry player like TELMEX has recognized the value in what we have accomplished operationally and intends to be a partner in our future success,” said Dan Akerson, chairman and chief executive officer of XO in a prepared statement.