Feeds

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

'Critically weakened'

  • alert
  • submit to reddit

Secure remote control for conventional and virtual desktops

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

Choosing a cloud hosting partner with confidence

More from The Register

next story
Musicians sue UK.gov over 'zero pay' copyright fix
Everyone else in Europe compensates us - why can't you?
Bladerunner sequel might actually be good. Harrison Ford is in it
Go ahead, you're all clear, kid... Sorry, wrong film
I'll be back (and forward): Hollywood's time travel tribulations
Quick, call the Time Cops to sort out this paradox!
Megaupload overlord Kim Dotcom: The US HAS RADICALISED ME!
Now my lawyers have bailed 'cos I'm 'OFFICIALLY' BROKE
Forget Hillary, HP's ex CARLY FIORINA 'wants to be next US Prez'
Former CEO has political ambitions again, according to Washington DC sources
Euro Parliament VOTES to BREAK UP GOOGLE. Er, OK then
It CANNA do it, captain.They DON'T have the POWER!
prev story

Whitepapers

Free virtual appliance for wire data analytics
The ExtraHop Discovery Edition is a free virtual appliance will help you to discover the performance of your applications across the network, web, VDI, database, and storage tiers.
A strategic approach to identity relationship management
ForgeRock commissioned Forrester to evaluate companies’ IAM practices and requirements when it comes to customer-facing scenarios versus employee-facing ones.
10 threats to successful enterprise endpoint backup
10 threats to a successful backup including issues with BYOD, slow backups and ineffective security.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Website security in corporate America
Find out how you rank among other IT managers testing your website's vulnerabilities.