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Friday, 31 August, 2001, 14:42 GMT 15:42 UK
Excite@Home's woes mount
Excite logo
The crisis at high-speed internet firm Excite@Home has deepened, with two of its key partners terminating distribution deals and a cash crunch deadline looming.

Excite@Home admitted that it had appointed an investment bank to help explore restructuring options, after Cox and Comcast, two cable TV firms, said they would no longer distribute its internet service.

At the same time, the company faces a Friday deadline to repay $50m that it owes to Promethean Investment, which provided it with an emergency loan earlier in the year.

The company's shares tumbled by 25% in early trading on the Nasdaq exchange on Friday, and its stock is now threatened with delisting.

Cash crunch looms

Speculation over Excite@Home's future has been lively for the past couple of months, since the firm admitted it was running out of cash.

The company, which boasts 3.2 million subscribers to its high-speed cable modem internet access service, ran up losses of $833m in the first three months of the year, and now has about $1bn in debt.

Earlier in August, its then-auditors, Ernst & Young, said that there was "substantial doubt" about the AT&T subsidiary's ability to continue as a going concern.

Excite@Home subsequently sacked Ernst & Young as auditors.

Rescue hopes

Excite@Home said it was continuing to hold discussions with Cox and Comcast about ways in which the firms could continue to provide its service to their subscribers.

There have also been persistent rumours during the week that investors were likely to appear with a rescue bid for the firm.

But no deal has yet been confirmed.

And even if these problems are resolved, the issue of debt could prove even more troublesome.

Under the terms of Promethean's loan, Excite@Home shares must remain listed on the Nasdaq.

Early on Friday, shares in the firm had fallen to 39 cents, down from their high of nearly $19 last September.

Under Nasdaq rules, companies whose share price falls below $1 for a prolonged period must be delisted.

A delisting could therefore instantly propel the company into bankruptcy.

See also:

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