On a day traditionally associated with gags and practical jokes, AT&T Canada Inc. was in no laughing mood when it announced on Tuesday that it has successfully completed its debt restructuring process.
The company said it now has approximately $139 million in cash on hand, a far cry from its position less than six months ago. The troubles began last May when the company announced it was parting ways with over 1,000 employees and again slashed 270 jobs in July 2002, blaming the Canadian Radio-television Telecommunications Commission (CRTC) price cap ruling for the cuts. In the same month, AT&T Canada appealed the CRTC’s decision – and had its request shot down last week. [Please see Government rejects AT&T Canada appeal.]
Then, only a month after its second round of job layoffs, the telco reported $1.4 billion in losses.
The woes continued last fall when the company announced that it was in the red for $4.5 billion in outstanding public debt and was seeking court protection for bankruptcy under the Companies’ Creditors Arrangement Act (CCAA). At the time, the company promised it was business as usual for all its customers, suppliers and employees.
In November, AT&T Canada was granted an extension beyond the initial 30 days granted by the court to pursue its restructuring in “an orderly fashion.” At the time, the company again reiterated that it accepted the capital restructuring process to be completed by the first quarter of 2003.
The restructuring process will include a name change from its parent AT&T Corp. by Sept. 9, 2003 and will stop the use of the AT&T brand by no later than Dec. 31, 2003 with the exception of the company’s calling card and Internet addresses no later than June 30, 2004. In addition, the company said it plans to focus on several areas going forward, which include continuing to target large- and medium-sized companies and offering Internet related products and services.
AT&T Canada remains cautious in discussing the new services it will offer, saying that it will still offer Frame Relay, consulting services, and will continue designing communications systems and security firewalls.
“The restructured company will continue to offer the full suite of services that it offered before the restructuring began,” said Brock Robertson, senior vice-president, treasury and investor relations at AT&T Canada in Toronto. He added that AT&T Corp. will remain an important customer and supplier as it generates approximately 20 per cent of its revenues directly or indirectly from the parent company in the U.S.
Lawrence Surtees, director, telecom research at IDC Canada Ltd. in Toronto balked at the successful restructuring announcement made, calling it a “public relations spin” with the big steps of court and bondholder approvals as more vital to the company’s continued survival having already been made public. He also noted that the telco would continue to focus its efforts on the large- and medium-sized companies here in Canada but given its recent troubles, success won’t come easily.
“Success is not going to be granted in the regulatory or political back rooms. It’s not going to magically come about with a new name and a clean financial slate. Its a good advantage but it doesn’t guarantee customer success,” he said.
The company is online at www.attcanada.com.