FiberTower toppling?

Wireless backhaul services provider FiberTower Corp. (NASDAQ: FTWR) is displaying all the signs of a company in financial distress. It has missed an interest payment, had members of its senior management team resign, delayed filing its Form 10-Q, received a notice of delisting from NASDAQ, and laid off employees.

Wireless backhaul services provider FiberTower Corp. (NASDAQ: FTWR) is displaying all the signs of a company in financial distress. It has missed an interest payment, had members of its senior management team resign, delayed filing its Form 10-Q, received a notice of delisting from NASDAQ, and laid off employees.

FiberTower’s problems came to light last week, beginning on November 16 when it announced it “had elected” not to fork over a $1.3 million semi-annual interest payment due the day before. The interest was on 9.00% Convertible Senior Secured Notes Due 2012. The notes carry a 30-day cure period, which gives FiberTower a little more than four weeks to come up with the payment. FiberTower says it will “evaluate different options to manage its debt load” during this time period.

Simultaneously with announcing that it would miss its interest payment, the company also announced that Chairman of the Board John Kelly and board members Phil Kelley and Randall Hack had stepped down from the board of directors. While asserting the resignations “were not the result of a disagreement with FiberTower on any matter relating to FiberTower's operations, policies, or practices,” the company did not offer further explanation.

But these were not the only items on FiberTower’s list of bad news. The company says it has seen a rash of customers terminate their service agreements early. Combining this fact with its decision to limit investment in its legacy network, it estimates that future cash flows it expects to generate by the network compared to its carrying value will require a material impairment charge relating to its long-lived assets and FCC licenses under generally accepted accounting principles (GAAP). While it’s still calculating the final figures, FiberTower says it estimates the charges for the quarter ended September 30, 2011, will range from $150 million to $170 million for the long-lived assets and from $158 million to $170 million for the FCC licenses.

With all this activity, FiberTower had received a Notification of Late Filing, or Form 12b-25, from the Securities and Exchange Commission for its third quarter 2011 Form 10-Q report. The notification gave FiberTower five additional days to file the form – which expired November 14. FiberTower admits it still hasn’t filed the form.

To put a cherry on the sundae, FiberTower received a letter from NASDAQ November 15, saying that the company was on 60-day notice of delisting because of the failure to file the Form 10-Q.

Finally, and perhaps inevitably, FiberTower revealed in a separate announcement that it would release approximately 40% of its workforce and stopped all capital and project related spending. The remaining 60% will focus on daily operations while the company figures out what to do next.

As of 10:00 AM this morning, FiberTower’s stock was selling at $0.32 per share.

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