The deal that Covad struck with it's investors is just about the best case scenario at this point. With $500 million in the bank they were just waiting it out until mid 2002 when the money ran out. No one is going to invest a large sum of money into a company with $1.4 billion in debt. No one would try to buy a company with $1.4 million in debt. No responsible ISP would sign a large deal which could supply the larger customer base needed with a company that has little operating capital left and $1.4 billion in debt. Customer would be quite pissed with losing service in 6-8 months due to the DSL provider going under.
The only negative thing happening here is that with the $250 million difference in capital Covad will have to find funding sooner, but they will reach profitability quicker and have a much better chance of long term survival. At this point, the worst case scenario is that they will end up being bought by a larger company, maybe SBC who owns a portion of the Covad already. Without having to take on that huge debt load any potential buyer would be getting a great deal on the last of the DSL CLECs.
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The deal that Covad struck with it's investors is just about the best case scenario at this point. With $500 million in the bank they were just waiting it out until mid 2002 when the money ran out. No one is going to invest a large sum of money into a company with $1.4 billion in debt. No one would try to buy a company with $1.4 million in debt. No responsible ISP would sign a large deal which could supply the larger customer base needed with a company that has little operating capital left and $1.4 billion in debt. Customer would be quite pissed with losing service in 6-8 months due to the DSL provider going under.
The only negative thing happening here is that with the $250 million difference in capital Covad will have to find funding sooner, but they will reach profitability quicker and have a much better chance of long term survival. At this point, the worst case scenario is that they will end up being bought by a larger company, maybe SBC who owns a portion of the Covad already. Without having to take on that huge debt load any potential buyer would be getting a great deal on the last of the DSL CLECs.