XO pans bondholders’ restructuring proposal

XO Communications yesterday declined to support a bondholder-led restructuring proposal and hopes to proceed with a plan led by key investor Ted Forstmann and partner Carlos Slim Helu.

XO officials said the bondholder’s plan did “not represent a feasible alternative for the successful restructuring of the company. The Forstmann-Slim plan, which would effectively wipe out all value in the company’s current stock, leaving Forstmann Little and Telmex--the Mexican telco controlled by Slim--with a 78% stake in the company.

The bondholders’ revolt was led by corporate raider Carl Icahn, reportedly would have wiped out most of XO’s debt and infuse $600 million into the company. Bondholders don’t like the Forstmann-Slim plan, which could create problems in a bankruptcy-court proceeding.

--Kevin Fitchard, staff writer