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"This financial restructuring and the related Chapter 11 filing are not a result of operational issues, but are driven by a need to deleverage the Company and resolve our balance sheet issues," commented Akerson. "Simply stated, the Company has too much debt, given the current and projected level of business operations." Since XO announced its initial restructuring plans in November 2001. During the fourth quarter of 2001 XO implemented a series of expense reduction and cash conservation initiatives. Late last year, XO also disclosed that it would not make cash interest and dividend payments on its unsecured notes and preferred stock beginning on December 1, 2001. About XO Communications XO Communications was one of the nation's fastest growing providers of broadband communications services offering a complete set of communications services, including: local and long distance voice, Internet access, Virtual Private Networking (VPN), Ethernet, Wavelength, Web Hosting and Integrated voice and data services. XO assembled an unrivaled set of facilities-based broadband networks and Tier One Internet peering relationships in the United States. XO currently offers facilities-based broadband communications services in 65 markets throughout the United States. Craig McCaw founded NEXTLINK Communications in 1994 and is its principal shareholder. Following the merger of NEXTLINK and Concentric in 2000, McCaw now serves on the XO™ board, and remains directly involved in the strategic direction of the company. McCaw is a wireless pioneer and was a widely respected leader in the telecommunications industry. He built McCaw Cellular Communications, Inc., from a startup into the country's largest provider of wireless communications services. In 1994, McCaw Cellular merged with AT&T for $11.5 billion, at the time becoming one of the largest mergers in U.S. business history. Prior to founding McCaw Cellular, McCaw built a family-owned, cable TV company into the nation's 20th largest cable operator. In March 1994, Mr. McCaw and Microsoft chairman Bill Gates formed Teledesic Corporation to offer broadband communications worldwide via low earth-orbit satellites. XO Communications have been involved in many lawsuits recently. The defendants include XO Chief Executive Officer and Chairman of the Board of Directors Daniel F. Akerson, President, Chief Operating Officer and Director Nathaniel A. Davis and Craig O. McCaw, the Company's founder, controlling shareholder, and Director. Complaints charges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 by, among other things, issuing false and misleading statements regarding XO's financial condition as well as its present and future business operations. In particular, the Complaint alleges that defendants misled the investing public concerning the Company's ability to finance its business operations until it becomes cash- flow positive. Throughout the Class Period, defendants stated that XO had sufficient cash to survive at least into mid 2003 without the need for further financing. These statements were false, and on November 29, 2001, defendants announced a transaction where the shareholders' equity was destroyed in exchange for a cash infusion of $800 million. Trading in the Company's stock was immediately halted.
The Telecom Disaster..!!
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