Covad Agrees to Deal to Help It Stay Solvent
Associated Press
Troubled high-speed Internet provider Covad Communications Inc. signed a $150-million loan and marketing agreement with onetime rival SBC Communications Inc., sending its stock up 34%.
The deal is expected to provide enough money to keep Covad alive until it starts generating positive cash flow, now expected by the second half of 2003.
SBC will make a one-time, $75-million prepayment secured by Covad assets. The deal does not increase SBC’s ownership in Covad, which is now about 5%.
Shares of Santa Clara, Calif.-based Covad rose 29 cents to $1.15 in over-the-counter trading. The company, which filed for bankruptcy protection in August, was delisted from the Nasdaq Stock Market in July. SBC fell 54 cents to $37.50 on the Big Board.
