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TouchAmerica sale on shaky ground but Deal finally reached

Touch America and 360networks are still hammering out details on the $43 million purchase of the Butte bankrupt telecom’s assets — but sources say the sale is on shaky ground.

By Leslie McCartney of The Montana Standard

"Actually, we’re anticipating an agreement today and if for some reason it doesn’t occur, then all bets are off," said John Harp, who represents the non-secured creditors’ committee in the voluminous bankruptcy proceedings in Delaware.

360networks, based in Vancouver, British Columbia, was the winner in a bidding war held this summer in Delaware and since that time Touch America and 360 have been working on a transition.

The sale was supposed to be finalized in late October, but was delayed and no reason was given. Insiders say that 360networks is jockeying to reduce the sale price by millions, but the exact nature of the disagreements were not disclosed.

Numerous attempts to reach 360networks — the successor company that has promised 40 to 50 jobs in Butte — were not successful Monday.

However, Touch America spokeswoman Linda McGillen said Monday that the two companies are proceeding through the complicated transaction.

"We are still working toward thecompletion of the sale," she said, adding that matters are moving along fine.

She did not have a definite date for when the sale would be consummated, but said that when the sale is final, pertinent documents will be filed with the Delaware bankruptcy court overseeing the Touch America.

The sale must be approved soon or it could spark a liquidity crisis at Touch America, which has been paying about $1 million in salaries in addition to its regular bills every month. And if the sale falls through, it is possible that the assets could be back up for grabs.

"From a creditors’ standpoint, we would revisit the potential other bidders," Harp said.

http://www.mtstandard.com/articles/2003/11/11/newsbutte_top/hjjgiiiijcebha.txt

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Deal reached in TA sale

By Leslie McCartney of The Montana Standard

While both Touch America and 360networks accuse each other of breaching an agreement, the two sides settled late Monday on a revised pact that has 360 paying millions less for the bankrupt Butte telecom.

According to court documents, 360networks will pay a base price of $28 million, or $8 million less than the $36 million base price originally offered for Touch America’s dedicated Internet services, private-line, dark fiber and other assets.

John Harp of Kalispell, spokesman for Touch America’s unsecured creditors’ committee, said Tuesday the deal covers 360networks’ purchase of the company’s customer base and a portion of its fiber optics network.

He said the price was lowered from the original $43 million because Touch America has lost customers since it filed for bankruptcy in June. He did not have figures on how many customers have left. Although court documents did not contain a figure, they said customers were moving to Qwest Communications.

A hearing on approval of the new sale agreement is scheduled for Thursday in U.S. Bankruptcy Court in Delaware.

Substantial court briefs filed Monday document a months-long fight between the two telecoms. They have been wrangling over documents, assets, operational money, regulatory approval and more.

After lengthy conference calls and difficult negotiations, the sides agreed on the new pact. They also asked the court to speed up approval of the agreement citing Touch America’s dire financial situation.

360networks was the winning bidder in an asset auction held last summer in Delaware following Touch America’s June bankruptcy.

The sale was to have been completed by late October, but the situation deteriorated with 360networks not ready to close the deal and blaming Touch America. In turn, Touch America blamed 360networks for the failure of the sale to go forward and wanted 360 to pick up Touch America’s expenses. 360networks balked.

Most significantly, 360 asserted that the business had undergone significant degradation as a result of the continued loss of customers away from the debtors’ network, the court brief said.

In the new agreement, 360networks will pay $28 million. However, that could further be lowered by $3.75 million under certain circumstances, but 360 is obligated to give Touch America any "pass-through" amounts to which it is entitled.

And while Touch America said it believes it was wronged, 360 could easily outspend it in litigation and the Butte business would become "administratively insolvent in the future," the court papers said. In addition Touch America said it was worried that if it didn’t make concessions with 360, it would not be able to sell its assets for anything but a "fire-sale" price.

“We’re hoping by the end of this month that we should be able to execute the agreement and start to put our attention to other assets that need to be sold to pay the creditors" said Harp.

A speedy approval of the sale is needed, Touch America argued, because it will enable the company to save nearly $900,000 a week in operating expenses.

Yet to be offered for sale is Touch America’s 4,300-mile network that the company built in conjunction with AT&T. Harp said no value has yet been put on that system. The network sold to 360 runs from Denver to Salt Lake City and from Minneapolis to Chicago.

Calls placed to both Touch America and 360networks were not returned Tuesday.

— The Associated Press contributed to this story. Reporter Leslie McCartney may be reached via e-mail at [email protected].

http://www.mtstandard.com/articles/2003/11/12/newsbutte_top/hjjgiiihjbfhja.txt

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