Feeds

Excite@Home exhumed to sue cable firms for $600m

'Critically weakened'

  • alert
  • submit to reddit

Combat fraud and increase customer satisfaction

ComputerWire: IT Industry Intelligence

Excite@Home, which went bankrupt a year ago and folded early this year, is suing former partners Cox Communications Inc and Comcast Corp for over $600m in profits, over allegations of insider dealing over two years ago,

writes Kevin Murphy

.

A lawsuit filed in Delaware last week names At Home Corp as the plaintiff, but is evidently the work of the terminal ISP's committee of unsecured bondholders. It claims a complex transaction in March 2000 "critically weakened" Excite@Home, while allowing Cox and Comcast to make huge profits from selling their stakes in the firm.

"The three controlling shareholders of ExciteAtHome - AT&T Corp, Cox and Comcast - each used their insider positions to force the company to enter into a series of convoluted and interconnected agreements... that benefited the controlling shareholders, but left ExciteAtHome critically weakened," the lawsuit said, according to Reuters.

At the time, Cox and Comcast together owned more that 10% of the company, and had an executive each on Excite@Home's board. AT&T also figured prominently on the board. The lawsuit alleges these privileged "insider" positions allowed the three companies to work out a deal that benefited them, but not Excite@Home.

A Cox spokesperson declined to comment but said: "We intend to vigorously defend ourselves." Comcast could not be reached for comment, but a regulatory filing made last week said: "Comcast believes this suit is without merit and intends to vigorously defend itself in the action." AT&T was not named as a defendant.

The transaction in question occurred the month before the dot-com bubble was well and truly bursting. Excite@Home extended its distribution deals with all three cable companies. Cox and Comcast both removed themselves from the Excite@Home board, and AT&T gained full voting control of the ISP and a majority on the board.

Excite@Home was to get its portal carried on AT&T's cable internet services until 2006 and on Cox and Comcast's until 2006, exclusively until 2002. The company would also get to sell its internet connectivity services to cable subscribers over the same periods. The ISP's bondholders now say that was insufficient consideration.

The deal also allowed Cox and Comcast to sell Excite@Home shares back to AT&T for $48 or a price calculated from the stock's recent performance at the time of the sale, whichever was higher. Excite@Home stock hadn't seen $48 since late 1999, and never saw it again, but AT&T was obliged to pay up anyway.

According to financial filings, Cox gained $307.4m and Comcast $293.3m from selling their Excite@Home stakes to ATT. The Excite@Home bondholders want this money to recoup some of the huge losses they made when the ISP folded without a buyer. Excite@Home is due to be liquidated shortly.

© ComputerWire

Combat fraud and increase customer satisfaction

Whitepapers

Mobile application security study
Download this report to see the alarming realities regarding the sheer number of applications vulnerable to attack, as well as the most common and easily addressable vulnerability errors.
3 Big data security analytics techniques
Applying these Big Data security analytics techniques can help you make your business safer by detecting attacks early, before significant damage is done.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Securing web applications made simple and scalable
In this whitepaper learn how automated security testing can provide a simple and scalable way to protect your web applications.
Combat fraud and increase customer satisfaction
Based on their experience using HP ArcSight Enterprise Security Manager for IT security operations, Finansbank moved to HP ArcSight ESM for fraud management.