Troubled Classic Communications Inc. last week said it's facing default on its debt payments, and that its prospects for raising new money have become increasingly bleak.
Back in March, Classic said it would be late in filing its 10-K annual report and that its auditors doubted that the company could continue as a "going concern." Those fears were verified in the company's annual report filed April 18.
In the report, Classic said revenues for the 12-month period ended Dec. 31 increased 0.7 percent to $185.5 million, compared to $184.3 million at year-end 1999. Cash flow declined $4.2 million, or 5.4 percent, to $73.4 million by year-end 2000.
For the quarter, revenue rose a paltry $600,000 to $45.8 million, and cash flow dipped $2 million to $17.3 million.
In a prepared statement, Classic said the first quarter of 2001 wouldn't be much better.
The company lost another 10,000 subscribers in the period, ending March 31 with 375,000 customers. Revenue and cash-flow performance is expected to be similar to that of the fourth quarter.
Classic's stock, which traded as high as $39 per share in 1999, closed April 19 at 62 cents, down 24.
The company said it would work with senior lenders to renegotiate $559 million in debt. It needs about $148.5 million in new financing to help service debt and fund the business.
The MSO hopes to sell nonstrategic systems with 50,000 to 100,000 subscribers to raise cash. Brera Capital Partners, Classic's largest shareholder, has agreed to lend the company $35 million.
Classic has been hit hard by direct-broadcast satellite competition, losing about 19,000 subscribers in the fourth quarter, declining to 385,000 customers. A digital offering from AT&T Broadband's Headend in the Sky has helped. Classic had 22,356 digital subscribers at quarter's end, nearly double that of the previous quarter.
"The fourth quarter and the full year 2000 operating results were disappointing, but we believe we are addressing the issues critical to positioning the company to move forward," Classic chairman James Kofalt said in a prepared statement.
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