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Managing Editor

XO scraps wireline spinoff

Apr 03, 20062 mins
Cellular NetworksNetworking

* XO agrees with buyer to terminate sale of wireline assets

XO Holdings said an agreement to spin off its wireline assets has been scrapped because pending litigation is delaying the deal’s closing.

The CLEC said it mutually agreed with Elk Associates to terminate last fall’s agreement for Elk Associates to purchase the company’s national wireline business for $625 million in cash and assumption of $75 million in debt. Elk Associates is owned by XO’s chairman and largest shareholder, Carl Icahn.

Under the terms of the purchase agreement, either XO Holdings or Elk Associates could elect to terminate the agreement if the sale were not to have occurred by July 3, 2006. This week, Elk notified XO Holdings’ board that it believed that delays caused by the pending litigation challenging the wireline sale would push the closing past July 3, and that Elk intended to exercise its termination right if the litigation remained pending on that date.

Elk also expressed its willingness, in order to avoid unnecessary further distractions and costs to XO Holdings, to mutually terminate the purchase agreement without seeking any damages or any break-up fee. After a hearing before the Delaware Court of Chancery and additional communications with plaintiffs’ counsel, XO Holdings determined to mutually terminate the purchase agreement effective March 30.

As a result, XO continues to own and operate its wireline and wireless businesses.

“For our customers and employees, it is business as usual,” Carl Grivner, CEO of XO Holdings, said in a statement.

The company’s wireline business operates under the “XO Communications” brand and the wireless business will operate as a separate unit under a new brand, “Nextlink.” The company expects that XO Communications and Nextlink will sell each other’s products and services in order to take advantage of market opportunities in both the business and service provider markets.

Managing Editor

Jim Duffy has been covering technology for over 28 years, 23 at Network World. He covers enterprise networking infrastructure, including routers and switches. He also writes The Cisco Connection blog and can be reached on Twitter @Jim_Duffy and at

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