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EX-99.1
PRESS RELEASE, DATED September 18, 2000
FOR IMMEDIATE RELEASE
For more information contact:
Investor Relations
(303) 414-5347
[email protected]
ICG Communications Announces
Revised Business Plan, Forecasts and Customer Service Issues
ENGLEWOOD, COLORADO, September 18, 2000 - ICG Communications, Inc. today
announced a revised business plan in order to conserve cash resources, address
serious customer service issues that have arisen and for other reasons. The
revised business plan calls for controlled expansion, quality of service
enhancements and cost savings. The new plan anticipates that for the remainder
of 2000 and in 2001 the Company will experience reduced capital and corporate
expenditures, slower expansion, significantly lower line installations, lower
overhead costs and significantly reduced revenues and EBITDA. The revised plan
anticipates for the year 2000 revenues of approximately $630 million, EBITDA of
approximately $17 million and capital expenditures (CAPEX) of approximately $1
billion. Additionally, the revised plan anticipates for the year 2001 revenues
ranging from $700 million to $800 million, EBITDA ranging from $100 million to
$150 million and CAPEX ranging from $250 million to $350 million. This
compares to prior estimates for 2001 of approximately $1.4 billion in revenue,
approximately $350 million in EBITDA and $800 million in CAPEX.
Recently ICG has experienced significant customer service issues within certain
segments of its Internet Remote Access Service, or IRAS, business that
represents a significant portion of its revenues. These issues have involved,
among other things, network outages, equipment failures and technical
difficulties. As a result, some of its IRAS customers, including certain
principal customers, have advised ICG that it is not in compliance with its
service agreements. Some of these customers have reduced their commitments to
ICG. These customers have indicated that, absent these issues being resolved,
they intend to terminate their contractual arrangements with ICG. As a result of
these quality of service issues, the Company expects to receive minimal revenues
in the third and fourth quarters of this year from IRAS services with respect to
approximately 150,000 installed IRAS lines. Some customers have also
significantly slowed adding lines, which, along with other factors, will
significantly adversely affect the number of lines provisioned by the Company in
the third and fourth quarters of 2000. The Company previously had anticipated
net line additions of approximately 470,000 lines in the third and fourth
quarters of 2000 and approximately 1,000,000 lines in 2001. The revised business
plan provides for net line additions of approximately 125,000 lines during the
second half of 2000 and approximately 500,000 to 600,000 lines for the year
2001. Most of the new line additions over these periods consist of the
Company's PRI (primary rate interface) and RAS (remote access service) products,
which have not been materially impacted by current customer service issues.
ICG is currently addressing its customer service issues internally and with its
customers. The Company is currently working together with its suppliers and
vendors to appropriately and quickly resolve all the existing quality and
service issues.
The revised business plan will result in reduced capital spending for the
remainder of 2000 and 2001 and significantly slowed expansion and line
provisioning for the remainder of the year and into 2001. The plan will also
result in significant downward revisions of previously announced financial
expectations for the Company. At this time, it is expected that for the
remainder of the year 2000 and 2001 it will experience significantly reduced
revenues and EBITDA as compared to the amounts previously anticipated.
Previously, ICG had anticipated in excess of $400 million of revenues and
approximately $60 million of EBITDA for the third and fourth quarters of 2000.
The revised estimates are for approximately $300 million of revenues and
negative EBITDA of approximately $25 million during the same period.
The Company's revised business plan reduces capital expenditures in the year
2001 by approximately $450 million to $550 million, representing a 56% to 69%
reduction. This reduction and other factors will result in curtailment of
certain expansion plans previously announced, including in the area of the
Company's commercial business, it's DSL business and new markets. The revised
business plan includes the completion of the 22 expansion markets during the
year 2001, rather than in 2000 as previously anticipated.
Under the revised business plan, the Company will be in breach of certain
covenants under its $200 million senior secured bank credit facility, in the
absence of obtaining appropriate waivers.
Under the revised business plan, the Company will still need additional funding.
The Company is engaging leading financial institutions to explore all strategic
options involving the Company.
Forward Looking Statement Disclosure
Information and statements presented in this press release are intended to be,
and are hereby identified as, "forward-looking statements" within the "safe
harbor" provisions of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements and information are subject to risks and
uncertainties. Actual events or results may differ materially from the forward-
looking statements set forth herein. For example, without limitation, the
Company's statements and projections regarding revenues and EBITDA and the
resolution of its customer service issues are forward-looking. There may
continue to be decreased demand for the Company's services and, as a result and
for other operating reasons, including the lack of access to capital, the
Company's actual revenues and EBITDA may be less than currently anticipated.
Continuing competition and general economic conditions also may adversely affect
the actual operating results of the Company. Risks and uncertainties affecting
the Company are detailed from time-to-time in various reports filed by the
Company with the Securities and Exchange Commission, including Form 10-K (filed
for the year ended 1999) and Forms 10-Q (filed quarterly subsequent to March 31,
September 30 and June 30).
