News

Ardent Communications launches financial restructuring

February 28, 2002

ARLINGTON, Va. - Internet service provider Ardent Communications Inc. (OTCBB:ARDT), citing economic conditions and uncertainty in the wake of the Sept. 11 terrorist attacks, announced on Oct. 11 that is has filed for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court for the District of Columbia.

The filing is part of a company restructuring that includes the release of an unspecified number of employees. Ardent provides high-speed Internet services to businesses in 38 metropolitan areas and Internet kiosks at a limited number of hotels, cruise ships, airports, and retail centers. The company said its operations would probably not be affected by the Chapter 11 proceedings.

"We were in the midst of restructuring before we filed Chapter 11, and were successful in many aspects of the process, including reducing network and administrative costs and increasing revenue and target margins," Michael Lee, Ardent president and chief executive officer, said in a news release. "We are still executing to this restructuring plan. However, with recent events, we have now chosen to continue this process under the protection of Chapter 11 as a path to ensure long-term viability and maximize value."

On August 20, the company reported that at the end of the second quarter of 2001 it had total assets of $102 million compared to total liabilities of $110 million, including current assets of $13.9 million compared to current liabilities of $84.9 million. Ardent reported net income of $10.6 million for the quarter, primarily due to a gain on the sale of assets totaling $35.4 million.

On July 5, the company received a $19.5 million bridge loan from CII Ventures II LLC to continue funding operations. In its second quarter report, the company said it would generate revenue through loans and the sale of equity and non-strategic assets, but warned it could still face financial turmoil.

"If the company is unable to generate additional financing and adequate cash, there will be a material and adverse effect on the financial condition of the company, to the extent that a restructuring, sale, or liquidation of the company will be required, in whole or in part," the company reported.

Formerly known as CAIS Internet Inc., company shareholders approved changing the company's name to Ardent in late July (See story: CAIS closed -- shareholders approve Ardent as new name). The move came less than a month after the stock was moved from the NASDAQ board to its Over the Counter Bulletin Board (See story: CAIS off NASDAQ).

Last year, the company raised $160 million through venture capital investments and an investment by Microsoft Corp. But Lee said it was crucial for Ardent to prove itself self-sufficient.

"With the lack of funding available in these current market conditions, we needed to be completely self-sustainable without outside financing," Lee said. "We are initiating actions, including the filing of this petition, that will enable continuing operation of Ardent as we work to adjust the company's business model, sales strategy and debt commitments."