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Shareholders Sue XO

Allege transferring control of XO to Forstmann Little comes at the expense of XO's common stockholders

January 4, 2002

2 Min Read

LITTLE ROCK, Ark. -- The Law Firm of Cauley Geller Bowman & Coates, LLP announced today that a class action has been filed in the United States District Court for the Eastern District of Virginia on behalf of investors of XO Communications, Inc. (OTC Bulletin Board: XOXO) (formerly Nasdaq: XOXO) ("XO" or the "Company") common stock who object to the transaction announced on November 29, 2001. A copy of the complaint filed in this action is available from the Court, or can be viewed on the firm's website at http://www.classlawyer.com/pr/xo_communications.pdf. According to the investors, XO insider Forstmann Little & Co. ("Forstmann Little"), through its representative on XO's Board of Directors, Sandra J. Horbach, entered into a transaction with XO and Telefonos de Mexico S.A. de C.V. ("TelMex") that will transfer control of XO to Forstmann Little at the expense of XO's common stockholders. Common stockholders have been told that their entire equity stake in XO is expected to be wiped out by this transaction. Daniel F. Akerson ("Akerson"), XO's Chairman of the Board and Chief Executive Officer, who is a former general partner of Forstmann Little, is named as a defendant in the action along with Forstmann Little and the other directors of XO. According to the allegations of the complaint, Akerson and other management personnel of XO were quoted over the last year as stating that XO had over a billion dollars in cash available and was funded well into 2002 and 2003. Shareholders who purchased the common stock of XO or continued to hold their common stock in light of these representations were understandably quite surprised when XO announced a rush transaction in which common stockholders' equity stake in XO would be "restructured" out of existence, as indicated in the complaint. The complaint asserts claims for breach of fiduciary duty by Forstmann Little, and for violations of the federal securities law by certain XO directors.

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