- The Washington Times - Wednesday, April 11, 2001

A bankruptcy court judge yesterday approved a plan by E.Spire Communications Inc. to borrow $25 million to fund operations.

U.S. Bankruptcy Judge Peter J. Walsh will hold another hearing May 16, when he could allow E.Spire to borrow an additional $60 million.

E.Spire Chief Financial Officer Bradley E. Sparks said the $85 million in debt financing that the company expects to gain access to will last until it emerges from bankruptcy.

Access to the money, he said, "is very important."

"That's our source of cash for operating through bankruptcy," Mr. Sparks said.

E.Spire, based in Herndon, Va., will use the court-approved financing to pay expenses incurred since the March 22 bankruptcy filing, spokeswoman Peggy Disney said.

E.Spire, which filed for Chapter 11 bankruptcy protection nearly three weeks ago, is a competitive local-exchange carrier that markets local calling service and Internet access to businesses. It had about $10 million in cash on hand before the bankruptcy judge in Wilmington, Del., approved the loan yesterday, Mr. Sparks said.

The company said when it filed for bankruptcy last month it had secured a line of credit for up to $85 million from a group of lenders led by Foothill Capital Corp., Ableco Finance LLP and E.Spire Chairman and Acting Chief Executive George F. Schmitt.

Mr. Schmitt will loan $10 million, Miss Disney said. The company didn't disclose how much money Foothill Capital and Ableco Finance will loan.

E.Spire continues to work on a restructuring plan, proposing how to overcome its massive debt. When E.Spire filed for bankruptcy, it listed $911.2 million in assets and $1.47 billion in debts, according to documents filed with the bankruptcy court.

Separately, the company is negotiating with bondholders on a plan to convert their debt into equity in E.Spire.

Chase Manhattan Bank is E.Spire's largest creditor, and the company owes the bank $905 million. It owes Metromedia Fiber Network Services Inc. about $6.7 million and telecommunications-equipment maker Lucent Technologies about $6.4 million.

E.Spire had 1,806 employees as of Feb. 6.

The Nasdaq Stock Market halted trading of E.Spire's stock the day it filed for bankruptcy.


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