Touch America Goes Bankrupt
BUTTE, Mont. -- Touch America Holdings, Inc. (OTC: TCAH) announced today that the Company and all its subsidiaries have filed voluntary petitions under Chapter 11 of the United States Bankruptcy Code in the District of Delaware.
"Touch America has been struggling to become cash flow positive in this difficult economic environment," said Bob Gannon, Chairman and CEO. "Based on the continuing uncertainty about our liquidity, the Board decided that seeking bankruptcy protection was the best option to deal fairly with our creditors, customers and employees."
The Company also announced the sale of its Private Line and Dedicated Internet businesses for $28 million, subject to certain post-closing adjustments, to 360networks Corporation, a leading broadband telecom service provider backed by WL Ross & Co. The sale proceeds will be used to pay pre- and post-filing obligations.
Touch America has received a commitment for a Debtor-in-Possession credit facility for $5 million from WLR Recovery Fund II, LP, a fund managed by WL Ross & Co. This facility will add liquidity to pay vendors for post-petition goods and services and to pay employees in the ordinary course of business.
As part of the bankruptcy filing, Touch America requested from the court various measures to provide for the smooth operation of the Company. These include measures to assure that the filing has no effect on customers or on the payment of salaries, wages, and benefits to the Company's employees. Touch America will continue with its cost-cutting programs to ensure efficient and effective operations as it pursues other buyers to purchase remaining parts of the Company.
Touch America Holdings Inc.