Saturday, September 28, 2002

Broadwing to sell long-distance?


Bell unit won't confirm offer for money-loser

By Mike Boyer, mboyer@enquirer.com
The Cincinnati Enquirer

        Officials for Broadwing Inc. said late Friday that they couldn't confirm reports that a long-distance company, backed by famed investor Warren Buffett, had offered to buy its money-losing long-distance network.

        Quoting unidentified sources, Bloomberg Business News said Broomfield, Colo.-based Level 3 Communications Inc. offered to buy Broadwing Communications for as much as $200 million.

        Level 3's bid was made in the past month in response to a letter from Broadwing, Bloomberg said, citing unidentified sources.

        An acquisition would allow Level 3 to connect customers such as Procter & Gamble Co. and BCE Inc., Canada's biggest phone company, to its fiber-optic network.

        Tom Osha, a Broadwing spokesman, reiterated comments by new CEO Kevin Mooney last week that the company was evaluating its options.

        “We continue to look at how best to position our broadband business for success in this challenging market environment,” Mr. Osha said.

        Level 3 spokesman Arthur Hodges declined to comment.

        This week, Jack Cassidy, Cincinnati Bell president who was named Broadwing's chief operating officer, told reporters the company was pausing to examine all of its operations in light of the turmoil in the telecommunications industry.

        Mr. Mooney and Mr. Cassidy were promoted and named to Broadwing's board after the surprise departure last week of Rick Ellenberger as chairman and CEO.

        Mr. Ellenberger's resignation, which the company said was by mutual agreement, has fueled investor speculation the company would divest or close its money-losing broadband business.

        Two months ago, Level 3 got a $500 million infusion from Mr. Buffett's Berkshire Hathaway, along with Longleaf Partners Funds and Legg Mason Inc.

        Mr. Buffett has said Level 3 can capitalize on rivals' failures because it has financial backing and experienced managers, including chairman Walter Scott, a director of Berkshire Hathaway.

        Shares of Broadwing fell 24 cents to $1.89 in New York Stock Exchange composite trading Friday. Level 3 rose 2 cents to $3.80 on the Nasdaq Stock Market.

        Sales at Broadwing's long-distance and data fell 13 percent to $278 million last quarter.

       



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