Winstar to Get $1.02 Billion in New Capital for Expansion

Winstar Communications Inc. said Wednesday it will receive $1.02 billion in new capital, a quarter of which is an equity investment from Microsoft Corp., Compaq Computer Corp. and others. The investment helped send shares of the wireless phone and data company up 14%.

Microsoft, Compaq, CSFB Private Equity and investment company Welsh, Carson, Anderson & Stowe will provide $270 million. An additional $750 million will be borrowed from banks and suppliers, Winstar spokesman Kevin Cavanaugh said. Winstar rose $3.13 to close at $25.50 on Nasdaq.

Winstar, which transmits data through pizza-size dishes on buildings, will use the money to expand its network and add services. The investment will finance it into 2002. Winstar previously had enough cash to get through 2001. Falling stock prices and competition from others, including Verizon Communications, has caused a cash crunch in the industry.

“The thing that people were focusing most on was financing,” said Donna Jaegers, an analyst at Invesco Funds Group Inc., which bought Winstar shares this week.

Shares of other local phone companies rose. Teligent Inc. rose 34 cents to close at $6.69 on Nasdaq, and XO Communications Inc. rose 38 cents to close at $28.88 on Nasdaq.

Separately, New York-based Winstar said its third-quarter loss widened on increased costs, though not as much as expected.

The third-quarter loss was $203.5 million, or $2.50 a share, up from $160.5 million, or $2.18, a year earlier. Sales rose 63% to $195.1 million from $119.5 million, Winstar said.

Founded in 1993, Winstar serves 60 U.S. markets and 13 international markets, according to its Web site. Winstar has more than 27,500 customers, including the U.S. government, Williams Communications Group Inc. and Siebel Systems Inc.