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Summary:

Clark McLeod is back in news, and so is his telecom disaster McLeod USA. The company announced that it is putting up for sale, and unless it finds a buyer, the company will have to file for bankruptcy again. McLeod USA had filed for bankruptcy back […]

Clark McLeod is back in news, and so is his telecom disaster McLeod USA. The company announced that it is putting up for sale, and unless it finds a buyer, the company will have to file for bankruptcy again. McLeod USA had filed for bankruptcy back in 2001 and had re-emerged in 2002. There were some doubts that this company could really make a go of it, despite the retrenchment. Things are equally bleak for some other telecom operators who filed for bankruptcy and have since re-emerged. XO and Birch are two such companies.

In the fourth quarter, the company racked up a loss of over $98 million, on sales of $162 million. The company has $45 million in cash and has to make $18 million in interest payments. “To me, McLeod’s current business, its size, market share and presence in the industry are insignificant,” says Ivan Feinseth, director of research at Matrix USA, a New York brokerage told Smart Money, “At this point, I don’t see them even registering on anyone’s radar screen, let alone as an acquisition candidate.” Still for companies looking to expand in smaller cities in the midwest might find McLeod a bottom-of-the-barrel kind bargain.

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  1. I suppose one can draw up their own conlcusions from their recent finacial release – http://www.mcleodusa.com/ResourceRetrieval?fileId=375

  2. Thanks for the link Frank. Things do look quite bleak for these guys -

  3. I have had some experience with MCLD as a service provider and they are a disaster. How do you lose $98M on $162M in Sales in one quarter? Seriously, that is hard to do.

  4. i agree with you. they and everyone like them needs to realize that its time to scale back and do things different. mcleod and others are selling nothing different and as a result they all seem commodity service offerings. anyway it is a matter of time before they vanish.

  5. How many times can a company file bankruptcy and still remain in the market

  6. good question, dave. if airlines are any indicator this cycle can go on forever it seems. remember panam and twa?

  7. Mark Burkholder Tuesday, June 14, 2005

    Any ideas on who might buy them if anyone at all? The scary part is that their debt extension only goes to July. If they do not restructure their debt or get bought will they automatically default on the debt? Will that mean the liquidation of the company? Will their customers even get a 30 day notice of disconnect of services?

  8. the way things are going, they might end up getting liquidated. well this way the service will end up in the hands of a more established player.

  9. Mark Burkholder Wednesday, July 6, 2005

    anyone hear anything on McLeod lately? Only about two weeks until their debt repayment extension expires once again. Can a telecom company really declare Chapter 11 twice in a 4 year period?

  10. Mark Burkholder Wednesday, July 20, 2005

    well tomorrow is the deadline on their debt repayment -I have seen no news on a buyer. Any one hear anything?

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