Struggling CLEC Trinsic Inc., the former Z-Tel Technologies Inc., has filed for Chapter 11 bankruptcy protection.
The company has steadily been losing money in what CEO Trey Davis called a post-UNE-P marketplace. In its most recent financial report with the Securities and Exchange Commission in December, Trinsic reported third-quarter losses of $1.5 million, or 8 cents per share, on revenue of $38.5 million. In the second quarter of 2006, Trinsic lost $6.9 million in revenue.
Despite the slightly improved numbers, when Trinsic learned it wouldnt get crucial short-term financing from investor Thermo Credit LLC, it had no choice but to file for bankruptcy protection, Trinsic told the Tampa Bay Business Journal. Still, Thermo Credit has agreed to advance up to $11 million to Trinsic. The advances, according to a Trinsic press release, will be secured by first priority liens on all of the company’s assets. Repayment primarily will come from money collected on accounts receivable, Trinsic said.
The bankruptcy protection filing applies to Trinsic and its affiliates, which include Trinsic Communications Inc. and Touch 1 Communications Inc.
Trinsics announcement came nearly a year after the official end of government-mandated pricing on UNEs, the access method to the Bell networks on which Z-Tel built its business model. Z-Tel had been the poster child for the government-mandated UNE-P used to deliver service to millions of residential and small business customers over the Bell networks.
The company leveraged the platform to help some of the biggest long-distance providers namely MCI Inc. and Sprint Corp. compete with the incumbent phone companies in the local residential market. Z-Tel also offered directly local phone service to consumers and small businesses over the Bell networks.
Part of Trinsics move away from UNEs included shifting to IP-based networks and services, but the company still had to make higher-cost commercial agreements with the ILECs to replace its UNE contracts.
“In the past three years we’ve worked very hard to reduce our cost structure to levels more consistent with the margins available in a post-UNEP marketplace and we have made steady progress in this regard, Davis said. Nevertheless, regrettably, we must now take this step in order to gain additional time and the legal means to further rationalize our cost structure and protect our business and our customers.
Trinsic Inc. www.trinsic.com
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October 15 2019 @ 16:33:31 UTC