IFC Files Chapter 11
IFC blamed its fate partly on unpaid bills from Velocita Corp., the service provider funded by Cisco Systems Inc. (Nasdaq: CSCO) that is helping AT&T Corp. (NYSE: T) build half of its next-generation network. Specifically, IFC says it ceased work on Velocita's network because Velocita owes it more than $29 million for work and cost reimbursements.
Velocita disputes the amount it supposedly owes and questions whether IFC fulfilled enough of its contract to deserve payment. And, though the two companies severed their relationship this week, Velocita says IFC is only one of a handful of subcontractors it uses and its network buildout schedule won't be impaired (see Velocita Disputes IFCI Statement).
Another company affected by IFC's Chapter 11 status is optical equipment startup Metro-Optix Inc., which announced IFC as a customer in April 2001. The two companies had a reseller arrangement that, according to Metro-Optix, was worth $5 million (see Int'l FiberCom to Sell Metro-Optix Platform and Qwest Tests Metro-Optix).
"We won't comment at this time because the equipment division of IFCI with whom we do business is being sold, and also out of respect for their situation at this difficult time," says Peter Grau, Metro-Optix's senior VP of sales.
Despite Grau's respect, IFC apparently hasn't found a buyer yet for the equipment division, for which it took a $41.4 million writedown for the nine months ended Sept. 30, 2001. Apparently, the company wished to reduce its assets to liquidation value, even though it hasn't found a buyer. Overall, including the charge, IFC lost $143.6 million on revenues of $226.7 million, according to its filings with the U.S. Securities and Exchange Commission.
IFC also announced this week that its chairman and CEO, Joseph P. Kealy, has resigned. The company's board appointed an outside director, Peter A. Woog, as chairman and CEO.
— Phil Harvey, Senior Editor, Light Reading