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WINfirst the Latest Struggling Overbuilder

Western Integrated Networks LLC's financial problems run deep enough that the company has sought bankruptcy-law protection from creditors while it reorganizes.

On March 11, the Denver-based company, doing business as WINfirst, filed for Chapter 11 protection in U.S. Bankruptcy Court for the District of Colorado.

The move followed the decision to halt construction on its only build, in Sacramento, Calif. The company has terminated about 200 construction-related personnel over the last two weeks.

Ten days ago, company president, Frank Casazza conceded that the company was suspending construction so WINfirst would "still be around" when the financial markets rebound.

The bankruptcy filing should help WINfirst conserve resources by eliminating some existing debt.

"This is strictly a financial restructure. The operating dynamics of the business still work," Casazza said in a prepared statement last week. "We fully expect to weather the financial market conditions and emerge from Chapter 11 positioned to move forward successfully."

Casazza confirmed last week that some initial investors had withdrawn their support, but did not specify which investors.

WINfirst's initial backers included J.P. Morgan Chase & Co., First Union Capital, Columbia Capital and Providence Equity.

The filing covers eight subsidiaries. One subsidiary posted $100 million in assets, but the other seven posted losses between $10 million and $50 million, each.

Besides Sacramento, the company has franchises in communities including Los Angeles, Seattle, San Diego, San Antonio, Dallas and Austin, Texas.

WINfirst creditor Bechtel Group's telecommunications division was WINfirst's strategic partner and was constructing the Sacramento system. But on Feb. 18, Bechtel filed a suit claiming a $9.9-million breach of contract in Sacramento Superior Court.

Other vendors also stand to lose. WINfirst's Sacramento system is the only U.S. deployment of Canal Plus Technologies Inc.'s interactive technology.

Vendors declined to talk about WINfirst's situation.

Some communities served by WINfirst franchise will come out ahead, though, even if the company does not recover.

San Diego, for one, required a cash local-access subsidy pre-payment from WINfirst. Half of that, $250,000, has already been paid, the city's cable administrator Marc Jaffee said.

"That won't be going back," he said. "In fact, it's already spent."

Sacramento will continue to monitor WINfirst's performance and encourage a buildout, said Rich Esposto, director of the local regulatory authority. WINfirst is in compliance with all local standards and current with payments, he noted.


WINfirst's filing shrinks the number of overbuilders still moving ahead. WideOpenWest LLC — focusing on existing systems it bought from SBC Communications Inc. in the Midwest — recently said it would suspend its build in the Denver area pending a resurrection of available capital.

Grande Communications continues to build its franchises from Austin to San Antonio, CEO Bill Morrow said. That venture is cash-flow positive, and revenue from current customers helps fund a further build-out of the systems, he said.

Seren Innovations Inc.'s Astound Broadband division said it just connected its 10,000th customer in Concord and Walnut Creek, Calif., where it competes with AT&T Broadband.

Altrio Communications Inc. continues to build competitive franchises in Pasadena, Arcadia and Monrovia, Calif., and is pursuing franchises in at least two areas of the city of Los Angeles, CEO Dave Rozzelle said.