By Kris Hudson, The Denver Post Knight Ridder/Tribune Business News
Apr. 26--Louisville-based AtLink Networks Inc. filed for Chapter 11 bankruptcy protection on Wednesday, laying off 200 workers -- including 50 in Colorado -- as it seeks a way to survive the bankruptcy of its largest customer.
AtLink, which relocated its headquarters to Louisville from Wisconsin in 1999, made its filing in U.S. Bankruptcy Court in Delaware. An AtLink spokeswoman said she could not say late Wednesday how much the company claimed in debt and assets.
Privately held AtLink provides point-to-point Internet connections, called virtual private networks, and high-speed Internet access through digital subscriber-line technology.
AtLink's difficulties began this month when its largest customer, New York-based Winstar Communications, filed for Chapter 11 bankruptcy protection, listing $5 billion in debt and nearly the same amount in assets.
In January, AtLink cinched a seven-year deal with Winstar in which AtLink would serve Winstar customers in areas where Winstar had yet to extend its communications network. In turn, Winstar agreed to invest $100 million in AtLink this year, AtLink said. The more-than-likely end of those payments played a large role in AtLink's bankruptcy.
"That was part of it," AtLink spokeswoman Karen Kralios said. "The markets have kind of dried up for more financing. We were in the midst of getting some more financing from our existing investors.
"A lot of that was based on the receipt of payments from Winstar," she said. "The timing of the Winstar bankruptcy was such that it put this additional funding in jeopardy."
Last year, AtLink landed $225 million in debt financing from Nortel Networks and $120 million in venture capital from private investors, including Madison Dearborn Partners, Columbia Capital, Telesoft Partners and Telecom Ventures.
In August, AtLink employed 600 people, including 175 in Colorado. Yet the company has whittled its staff in the months since. After Wednesday's layoffs, those figures stood at 200 and 50, respectively.
On Wednesday, AtLink's restructuring included the closure of its operations in Ohio, Michigan, Indiana and Minnesota. The company will continue to serve customers in Wisconsin and Illinois. It does not offer service in Colorado.
"It is difficult to pull out of markets where customer demand is high, but given the current capital market conditions, it is a necessary step toward saving the business," AtLink chief financial officer Gary Brandt said in a statement released by the company. "Furthermore, protection under Chapter 11 will enable us to focus on our core business and carefully evaluate our strategic options."
AtLink's is the latest of several recent bankruptcies of telecommunications companies in Colorado. Others were ICG Communications, Convergent Communications, Tess Communications, Reanet Corp. and FutureOne.com.
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