Icahn Takes Control of XOIcahn Takes Control of XO

XO Communications won approval from a U.S. Bankruptcy Court judge to move ahead with a reorganization plan that puts financier Carl Icahn in control.

XO, which provides bundled voice, data, Internet, and Web-hosting services for small and midsize companies, will emerge from bankruptcy protection with $554 million in cash and $500 million in long-term debt, out of its original $5.3 billion debt. Daniel Akerson, previously CEO of Nextel and a former MCI executive, will remain XO's chairman and CEO. He says XO may buy smaller telecommunications companies.

Icahn recently purchased the majority of XO's debt and is in line to swap it for more than 80% of the restructured company's stock. Last week, JetBlue Airways, an XO customer since 1999, renewed its voice, data, and call-center contract.

Icahn has invested in telecom because many of the companies are undervalued.