Winstar considers bankruptcy

Having missed payments on its senior debt securities, broadband fixed wireless service provider Winstar Communications announced that it is considering reorganization under Chapter 11 bankruptcy as a means of restructuring its debt.

Yesterday, the company failed to make aggregate interest payments of about $75 million on its senior debt facilities. Winstar has 30 days from that date to make the required payments in order to cure the default.

In addition, Lucent Technologies has declared Winstar in default of a vendor-financing loan.

“Over the last week and a half, we provided Winstar with several extensions for making payments to Lucent,” said a Lucent spokeswoman. “We’re monitoring the situation and we’re appropriately reserved.”

Representatives with Winstar did not immediately return requests for comment. In a prepared statement, however, Winstar disputed that it is in default.

News of financial difficulty for Winstar comes as no surprise. Earlier this month, the company laid off 43% of its work force and halted network expansion as a means of preserving capital.

Despite the tough times, Winstar continues to provide all services to its customers. In fact, the company seems to be approaching its current troubles as an occasion to reorganize rather than close its doors.

According to a press release from Winstar, “the company has retained the Blackstone Group to advise it on restructuring its debt…in order to avoid the significant adverse consequences,” of default.