Receiver keeps Stream flowing as it seeks to sell assets of fibre provider

Customers of Stream Intelligent Networks Corp. will continue to receive service despite the fact the company was recently forced into receivership (NL, Feb. 26/02). How long that service will remain is anybody’s guess, however. "I don’t think we’re giving any service guarantees, but I don’t think we’re at this stage shutting things down," Greg Prince of receiver PricewaterhouseCoopers tells Network Letter. "But that could change tomorrow. Who knows?" Stream, a metro area network provider, was forced into receivership late last month by General Electric Capital Canada Inc., one of its investors. According to documents filed with the Ontario Superior Court of Justice, Stream owed GE Capital more than $13 million under a July 1999 $46-million loan agreement. The company is insolvent and defaulted on its loan to GE Capital. The money had been earmarked for the purchase of telecom equipment and services from Nortel Networks Corp. and Bell Nexxia. For a while, Stream’s employees could not gain access to the corporate headquarters on Toronto’s Yonge Street. On February 20, landlord YCC Ltd. and London Life Insurance Co. locked the doors of the facility for non-payment of rent. The next day, all of the firm’s directors and officers resigned from the company. PricewaterhouseCoopers has been granted right of access to the building by the court. Stream is heavily in debt to two of its suppliers, Toronto Hydro and 360networks Inc. GE Capital worried that suspension of service by either of those two firms could severely jeopardize Stream’s ability to continue to serve its customers. In an affidavit filed with the court, Irena Butarich, portfolio manager in GE Capital’s telecom financial services group, states that Stream had been operating with a monthly deficit of approximately $400,000. To keep operating for the next two months, the firm would need a further $2 to $2.5 million infusion. While the company had been in talks with its investors, GE Capital determined Stream would not be able to reach a satisfactory agreement and pulled the plug on discussions on February 21. Stream is the latest in a long line of telecom failures. Prince, VP financial advisory services at PwC, notices a consistent trend of new entrants purchasing state-of-the-art equipment at full cost when the same products would later flood the market following bankruptcies. "They bought assets they could probably buy for 10 cents today that they paid full pop for," he notes. "They overpaid for a lot of their assets. And they build infrastructure and didn’t have enough revenue stream." The collapse of Stream reduces the number of players providing fibre access in Canada’s largest city. Steven Byrd of the information and technology department of the City of Toronto informs Network Letter that five companies currently have fibre cabling in the Ontario capital: Bell Canada, Telus Corp., GT Group Telecom Inc., 360networks, and Toronto Hydro Telecom. Rogers Cable Inc., which uses its fibre primarily for cable TV distribution but also has an Internet component, is also a player. "The City has a small amount of fibre and the Toronto Transit Commission also has fibre in its subway tunnels," he writes in an email to Network Letter. "This does not include other organizations, universities, hospitals, which use fibre to connect their various campuses." PwC is hopeful that it can sell off Stream’s assets. Andrew Wilczynski, senior VP at the receiver, told Butarich several parties have expressed interest in all or part of the defunct company’s business. But Prince tells Network Letter that in other telecom bankruptcies, such as that of Norigen Communications, it has been easier to unload physical assets like computers and desks than it has been to sell fibre and spectrum.

Receiver keeps Stream flowing as it seeks to sell assets of fibre provider

News | March 12, 2002

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