McLeodUSA CEO, CFO resign

Competitive local exchange carrier McLeodUSA announced the resignation of both its chief executive officer and chief financial officer today as the company negotiates with its lenders to restructure its capital.

Chris Davis, McLeodUSA’s chairman and CEO, resigned her management post on Friday, August 12, though she will remain chairman of the company’s board of directors. Ken Burckhardt resigned as director, CFO and executive vice president on Friday as well.

The company has appointed Stan Springel of Alvarez & Marsal to be its chief restructuring officer. Joe Ceryanec, the company’s controller and treasurer, has been named acting CFO.

The CLEC has received three forbearances on its loans from lenders, the most recent of which, granted in July, frees McLeodUSA from paying the principal and interest on its debt until Sept. 9, 2005. In the meantime, the company has been searching for an acquirer or strategic partner since at least March, but to no avail.

“None of the restructuring alternatives under evaluation provide any recovery for the company’s current preferred or common stockholders,” the company said in a statement issued Monday. “Therefore the company does not expect holders of its preferred or common stock to receive any recovery in a capital restructuring.”

Prior to joining McLeodUSA, both Davis and Burckhardt were financial officers with ONI Systems before the equipment vendor was acquired by Ciena in 2002. Davis joined McLeod as its chief operating and financial officer and director in August 2001 and was named CEO in April 2002, the same month Burckhardt joined McLeodUSA as its new CFO.