Connecticut May Sue to Recover Losses

Connecticut may sue Forstmann Little & Co. to recover the state’s $96-million investment, used by the fourth-biggest U.S. buyout firm for stakes in two money-losing telecommunications companies.

State Treasurer Denise Nappier said she hired a law firm, Paul Hastings Janofsky & Walker, after Forstmann Little failed to respond to the state pension plan’s concern about the buyout company’s more than $2billion in investments in XO Communications Inc. and McLeodUSA Inc., now valued at $1billion.

Forstmann Little said that it worked to keep Connecticut officials informed and that the McLeodUSA investment ultimately would be beneficial for the state pension fund.