WinStar delays SEC filing

(Telephony) Fixed wireless provider WinStar Communications delayed the filing of its annual report with the Securities and Exchange Commission, prompting questions about the company’s ability to raise much-needed cash.

In a tersely worded press release, WinStar said it did not file the report because it is engaged in talks “concerning certain material transactions which have not been completed.” The company said it would file its Form 10-K no later than April 17 and would not provide any additional information or comment on the situation.

Companies generally have 90 days from the end of the fiscal year to file 10-K reports with the Securities and Exchange Commission, but companies can request a 15-day extension.

WinStar reportedly is trying to arrange vendor financing or a wholesale deal for local broadband capacity on its 4400 on-net buildings, or both. As of the end of 2000, WinStar had $315 million in cash and equivalents, and a debt load of $5.8 billion. The company reportedly is burning cash at a rate of $90 million per month.

WinStar generally uses vendor-financing lines to fund its capital expenditures, and as of December 31, 2000, had $800 million still available in financing agreements with Lucent Technologies, Cisco Systems, Compaq, and Dell. About $400 million of the total was available from ailing Lucent, but WinStar drew down on some of that amount during the first quarter, according to Mark Kastan, analyst at Credit Suisse First Boston. In a March 13 report, Kastan said WinStar needed an additional $3 billion in capital to reach free cash-flow positive.

Another leading fixed wireless player, Teligent, also needs additional funds to operate beyond the second quarter. Ernst & Young, Teligent’s auditors, included a statement in Teligent’s 10-K filing that says recurring operating losses and a “substantial” need for working capital raise doubts about whether Teligent can continue “as a going concern.”

In February, Teligent reported a net loss of about $271 million, or $4.25 per share, compared with a loss of $157 million, or $2.89 per share, in 1999.

Like WinStar, Teligent’s stock is trading for less than $1 per share and is in danger of being delisted.