SAN JOSE, Calif. – ExciteAtHome, the leading provider of high-speed Internet access over cable television lines, said Friday it will sell its broadband business to AT&T Corp. for $307 million in cash and filed for bankruptcy protection.
Under the agreement, the once high-flying company's network would become a part of AT&T, which already has a controlling interest in ExciteAtHome. The deal is subject to a bankruptcy judge's approval.
The bankruptcy papers, filed late Friday in San Francisco, will not result in any service disruptions to ExciteAtHome's 3.7 million subscribers, the companies said.
"This filing is a tool to protect the value of the broadband business for the benefit of the company's financial stakeholders and will help reassure our customers that service will continue uninterrupted through the restructuring process," said Patti Hart, ExciteAtHome's chief executive.
The directors of both AT&T and ExciteAtHome approved the asset-purchase agreement. The deal, however, could be canceled if higher and better offers are received.
In a statement, AT&T said it plans to build on the assets it acquires to develop a more robust network. AT&T spokeswoman Eileen Connolly declined to comment on how the deal might relate to any possible sale of its broadband unit. In July, AT&T's board rejected cable TV provider Comcast Corp.'s unsolicited $40 billion stock swap offer for AT&T Broadband. On Friday, Comcast announced it had signed a confidentiality agreement rekindling talks.
ExciteAtHome's bankruptcy filing is the latest development in the spectacular rise and fall of Redwood City, Calif.-based company.
The announcement is the latest development in the spectacular rise and fall of Redwood City, Calif.-based ExciteAtHome.
At the height of the Internet boom in 1999, At Home Corp. merged with the portal Excite Inc. in a $6.7 billion merger. Executives at the time believed the company would someday rival America Online.
But the bubble burst and advertising revenue dwindled.
After losing $7.4 billion in fiscal 2000, ExciteAtHome said in April it needed to raise $75 million to $80 million to make it through 2001. The company restructured its fiber-optic network lease deal with AT&T and sold $100 million in notes.
Even so, ExciteAtHome said in July it needed more cash to stay in business in 2002.
The company also cut back its work force. The latest round came Tuesday, when it reduced its ranks by 27 percent, or 500 jobs as it shuttered its MatchLogic division and discontinued less popular services on the Excite portal.
Shares of ExciteAtHome closed up 2 cents, to 15 cents, in Friday trading on the Nasdaq Stock Market. It lost 3 cents in after-hours trading. It traded around $100 in April 1999.
AT&T became the controlling shareholder of ExciteAtHome with its purchase of the cable giant Tele-Communications Inc. in 1999. TCI, along with Comcast and Cox, was an early participant in the At Home network.
It's not the first time that AT&T has purchased the assets of a high-speed Internet provider during bankruptcy proceedings. Earlier this year, it paid $135 million for the assets but not the customers of NorthPoint Communications, which provided high-speed access over telephone lines.
Shares of AT&T closed up 60 cents to $19.30 in Friday trading on the New York Stock Exchange.