CS Wireless Tries to Avoid Bankruptcy Shadow7/12/1998 8:00 PM Eastern
Philadelphia -- CAI Wireless Systems Inc.'s reported
plan to seek Chapter 11 bankruptcy protection represents "another black eye on the
[wireless cable] industry," said Frank Hosea, senior vice president and chief
operating officer of CS Wireless Systems Inc.
But it does not follow that CAI's financial
difficulties carry over to CS Wireless, Hosea insisted last week, during the Wireless
Communications Association International (WCA) show here.
CS Wireless is 60 percent-owned by CAI. That connection was
enough to prompt Standard and Poor's Corp. to place CS Wireless on
"CreditWatch" with negative implications last Tuesday.
But, Hosea said, "we have cash. We're totally
independent" of CAI. Hosea told reporters that CAI's recent troubles will not
prevent CS Wireless from moving forward with its digital-wireless-cable launch in the
Dallas/Fort Worth, Texas, market.
S&P also lowered its senior unsecured rating on CAI
Wireless to "D" from "CCC+." And it lowered its corporate credit and
senior unsecured ratings of CS Wireless to "C" from "CCC+" and
S&P said in a statement that it believes that the
current analog-wireless-cable business may not be viable over the near term. It also
projected that revenue from new services such as digital cable, data and telephony will
not be enough to cover existing debt.
Hosea predicted that Wall Street will come around once it
sees success from digital-wireless-cable operators such as BellSouth Corp., GTE Corp. and
Pacific Bell Video Services.
"Something should happen by the end of the year, or
we'll have a whole lot of people with a whole lot of problems," Hosea said, when
asked if he thought that Wall Street's change of heart would come soon enough.
It's still too early to say how much financing is
needed to fund a successful digital-wireless-cable launch in a major market, Hosea said.
Variables include set-top costs, per-subscriber revenue, churn, market competition and