Sale Of Excite@Home Assets OpposedSale Of Excite@Home Assets Opposed

AT&T won't get Excite@Home's broadband assets for $307 million if the latter's bondholders have anything to say about it. The bondholders, who include early backers of the once high-flying company, reportedly are opposing the proposed sale on the grounds that the assets are worth more than AT&T is offering. The bondholders also have filed a motion with the U.S. Bankruptcy Court seeking to force Excite@Home to cancel its contracts with cable providers and renegotiate for larger deals that would help the company pay off its creditors. Bankruptcy Judge Thomas Carlson is scheduled to hold a hearing related to the case Tuesday.

Excite@Home officials declined to comment on the bondholders' actions. AT&T's offer, which was tendered earlier this month as Excite@Home was filing for bankruptcy protection, comes as the telco is looking for a buyer for its cable and high-speed access unit, AT&T Broadband. AT&T in July rejected an unsolicited $44.5 billion bid from Comcast Corp. and has actively been seeking competitive bids ever since.

Jupiter Research analyst Joe Laszlo says an acquisition of Excite&Home's broadband network assets likely would increase AT&T Broadband's value by significantly more than the $307 million offered. Laszlo says it's clear that Excite@Home's bondholders have done their homework in seeking to block the sale, recognizing that AT&T probably can justify paying a lot more to beef up its broadband network and keep all of its Excite@Home high-speed cable-access customers. "The folks who are holding onto Excite@Home's assets have a different idea of the worth those assets," he says.

Laszlo says AT&T's offer is the latest example of a growing trend in which, rather than trying to acquire struggling tech companies outright, suitors wait until those companies declare bankruptcy and then swoop in to buy strategic portions of their assets for a song. That trend has been particularly prevalent in the broadband industry. Just last month, WorldCom acquired network assets from bankrupt digital subscriber line provider Rhythms NetConnections Inc. in order to preserve high-speed access for customers in 31 markets. And six months earlier, AT&T bought most of the assets of failed Rhythms competitor NorthPoint Communications Inc. in order to cost-effectively strengthen its own network.