HSA Takes Charter Offer, Mulls Future

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After two months of deliberation, High Speed Access Corp. has agreed to sell
a lion's share of its cable-modem assets to Charter Communications Inc.

The agreement, announced Monday, calls for Charter to buy substantially all
of HSA's assets used to operate cable-modem service in Charter territory for an
estimated $81.1 million in cash.

Charter made an unsolicited bid Aug. 1 for the assets, which include headend
equipment, leased devices in customers' homes and the network-operations center
in Louisville, Ky. The final price will be determined at closing in late
November or December and will be subject to federal regulators' approval.

In addition, Charter is canceling 75,000 shares of HSA series-D senior
convertible preferred stock acquired as part of a joint $75 million investment
it made in December with fellow Paul Allen company Vulcan Ventures Inc.

Charter and HSA have signed a management agreement for the transition, and
about 70 percent of HSA employees are expected to be transitioned over to
Charter management. That and the sale price made it a good deal at a bad time,
according to HSA CEO Dan O'Brien.

'We carefully analyzed the assets they wanted to acquire and what the impact
would be on our other assets and obligations and liabilities that we have, and
we have been able to get what we think is a very good and fair price in an
extraordinarily difficult environment,' he said.

'You combine that outcome with also having 70 percent of our work force
maintaining employment, and we are quite pleased with the outcome, and we think
shareholders will be, too,' O'Brien added.

Meanwhile, HSA has been winding down the rest of its turnkey cable-modem
business with some 57 other MSOs. O'Brien expects that process to be complete by
the end of the month, with most partner MSOs opting to similarly buy HSA assets
and take over their cable-modem service.

Once that is complete, all that will remain is a cash-positive international
business. HSA's Bonn, Germany-based business provides Internet-protocol and
network design for Callahan Associates International LLC for its German Kabel
Nordrhein-Westfalen cable system.

What is not clear is what HSA will do after the Charter transaction closes.
O'Brien said the company is still looking at three options: taking all of the
proceeds and reforming a business, doling out some of the proceeds to
shareholders and continuing with its existing international operations, or
closing down entirely.

'We don't actually have a current inclination or proclivity, so it is
something we will be deliberating and assessing for the near term between the
signing and the close,' he added.