Excite@Home files for Chapter 11

Excite@Home announced Friday it is seeking Chapter 11 bankruptcy protection while it negotiates a deal with its principle owner AT&T for its cable broadband assets. If the deal goes through AT&T will inherit the country’s largest broadband ISP, and @Home will dissolve.

The agreement needs to pass muster with in bankruptcy court, and other carriers can still outbid AT&T. But if all goes as planned, AT&T expects the transaction to be completed early next year.

AT&T is offering $307 million for a laundry list of @Home assets, including its regional data centers and nationwide backbone. But the offer may not necessarily include the Excite.com portal, the content and media company Excite bought for $6.7 billion in 1999. @Home said it is entertaining separate offers for the portal.

Meanwhile, AT&T said it not only plans to acquire the @Home assets, it plans to expand its own cable broadband networks even as it entertains bids to sell its own cable business, AT&T Broadband. AT&T said Friday it would work with Excite@Home in order to prevent its 1.3 million customers from suffering service interruption.

The Chapter 11 filing lets @Home retire its $1.1 billion in debt while keeping its networks operating until a deal is struck. An Excite@Home spokeswoman said the ISP has $150 million in cash, enough to keep the networks lit until bankruptcy proceedings are settled.

“The filing is to protect our service and our customers,” the spokeswoman said. “The cash we have on hand is enough to last the entire restructuring process, however long it takes.”

--Kevin Fitchard, staff writer