March 19, 2004 Dallas, TX -- Allegiance Telecom, Inc. filed yesterday its proposed plan of reorganization with Judge Robert Drain of the U.S. Bankruptcy Court for the Southern District of New York. It also filed a disclosure statement. The company will request that a hearing on the adequacy of the disclosure statement and related procedures to solicit votes in favor of the plan be scheduled by the bankruptcy court for April 16, 2004.
The proposed plan and the disclosure statement are available via the court's website. A PACER password is required to access documents on the site. The company's bankruptcy case number is 03-3057(RDD). Additional information regarding the company's reorganization is available at www.algx.com/restructuring.
On February 13, 2004, Allegiance selected XO Communications Inc. as the winning bidder to purchase substantially all of the assets of Allegiance Telecom and its subsidiaries, including the stock of Allegiance's regulated operating subsidiaries. XO will not purchase Allegiance's customer premises equipment sales and maintenance business operated under the name of Shared Technologies, its dedicated dial-up access services business with Level 3, and certain other Allegiance assets and operations.
Under the terms of its bid, XO will purchase substantially all of Allegiance's assets for approximately $311 million in cash and approximately 45.38 million shares of XO common stock. The bid was approved by the court on February 19, 2004, and is currently undergoing certain federal and state government approvals. The company anticipates that subsequent to receipt of the federal approvals, which are expected by mid-April, 2004, XO Communications will run the Allegiance business under the terms of an operating agreement until final closing.
Allegiance also recently announced that it reached a settlement with Level 3 Communications, which subject to approval of the Allegiance bankruptcy court and other conditions, would terminate a multi-year contract Level 3 has to purchase wholesale dial access services, including the use of operating equipment, from Allegiance. Under this settlement, Level 3 has agreed to pay Allegiance $54 million in cash in exchange for Allegiance's contract with Level 3 and certain associated assets dedicated to this contract.
With the sale to XO and the settlement agreement with Level 3, Allegiance's remaining operations consist of its Shared Technology customer premises equipment installation, and maintenance business and the Allegiance shared hosting business. The company plans to operate the Shared Technology business as a free-standing enterprise, the stock of which will be held for the benefit of, or distributed to, the Allegiance creditors. Allegiance is in the process of selling its shared hosting business.