McLeod USA In Trouble Again

Clark McLeod is back in news, and so is his telecom disaster McLeod USA. The company announced that it is putting up for sale, and unless it finds a buyer, the company will have to file for bankruptcy again. McLeod USA had filed for bankruptcy back in 2001 and had re-emerged in 2002. There were some doubts that this company could really make a go of it, despite the retrenchment. Things are equally bleak for some other telecom operators who filed for bankruptcy and have since re-emerged. XO and Birch are two such companies.

In the fourth quarter, the company racked up a loss of over $98 million, on sales of $162 million. The company has $45 million in cash and has to make $18 million in interest payments. “To me, McLeod’s current business, its size, market share and presence in the industry are insignificant,” says Ivan Feinseth, director of research at Matrix USA, a New York brokerage told Smart Money, “At this point, I don’t see them even registering on anyone’s radar screen, let alone as an acquisition candidate.” Still for companies looking to expand in smaller cities in the midwest might find McLeod a bottom-of-the-barrel kind bargain.