Time Warner Telecom to Purchase GST Assets

GST Telecommunications Inc. filed for Chapter 11 bankruptcy protection and agreed to sell substantially all its assets to Time Warner Telecom Inc. for $450 million in cash. In documents filed in U.S. Bankruptcy Court in Wilmington, Del., GST listed $489.1 million in assets and $179.7 million in debts. Among GST’s largest unsecured creditors listed in court papers were holders of more than $140 million in bonds. The provider of voice, Internet and data services cited “escalating cash flow problems, a substantial debt load and an inability to secure other financing” as reasons for the bankruptcy. The asset sale, expected to close in the second quarter, is subject to approval by the court and federal and state regulators. More than 40 of the Vancouver, Wash.-based company’s units, including GST Telecom California Inc., GST Telecom Micronesia Inc. and GST Call America Inc., also sought protection. Littleton, Colo.-based Time Warner Telecom, which is 48% owned by Time Warner Inc. of New York, plans to expand into eight to 12 new markets in the next two years. GST representatives weren’t available for comment and Time Warner Telecom declined to comment. Trading in the shares of GST was halted on Nasdaq. They closed up 11 cents at 95 cents. Time Warner Telecom rose $2.88 to close at $59 on Nasdaq.