e.spire Files Chapter 11

The backbone provider reiterated its commitment to continue to serve its current customers. The key to survival is reducing expenses while increasing revenues.

by Roy Mark of www.internetnews.com [March 25, 2001]

Competitive local exchange carrier (CLEC) e.spire Communications, Inc. (NASDAQ:ESPI) and its subsidiaries have filed voluntary petitions for Chapter 11 protection with the U.S. Bankruptcy Court for the District of Delaware. The company also announced that it has secured a commitment for up to $85 million of debtor-in-possession (DIP) financing from a group led by Foothill Capital and Ableco Finance, LLC and including e.spire Chairman George Schmitt.

The company indicated that it believes that these funds will be sufficient to complete the restructuring process. Nasdaq suspended trading in the stock at 3:08 p.m. (EST) with the stock closing at 34 cents.

The company is CLEC, so its core business is providing local and long distance telephone service to small to medium sized businesses. Through its subsidiaries, ACSI Network Technologies and CyberGate, Inc./ValueWeb, e.spire builds and leases fiber networks and provides Web hosting and colocation services.

"e.spire will use this period to complete the reorganization of our finances and the equitization of our bondholder debt," said Schmitt. "We have been working closely with an informal committee of bondholders, representing more than 70 percent of our unaffiliated bondholders, and have received strong indications of support for a rapid restructuring."

Schmitt also said, "During this period, the management team, which has been in place since last April, will continue to lead the business. This team, along with all the employees of e.spire, has continually reduced operating expenses and increased revenues, resulting in e.spire's achievement of positive adjusted EBITDA for the first time in the fourth quarter of 2000."

Added Bradley E. Sparks, e.spire's chief financial officer, "We will continue to serve all of our customers without interruption. It will be business as usual while we complete our reorganization. We expect a smooth transition when we emerge in a few months. We will have a strong balance sheet and, due to the expected equitization of our bonds, will be within sight of profitability."

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