RCN Cable Firm Expected to File for Bankruptcy

Chicago Sun-Times

Published February 18, 2004

By Tammy Chase, Business Reporter

RCN Corp., the cable and phone company facing city fines for defaulting on payments and failing to expand service as promised, will probably file for bankruptcy reorganization, the company said over the weekend.

RCN, which came to Chicago in 2000, last month defaulted on a $215,000 payment it was supposed to make in January to meet its obligation to Chicago Access Network Television, or CAN TV. The city's cable commission earlier this month said it may fine RCN as much as $750 a day for that and for not meeting previous agreements to expand cable television offerings beyond the lakefront, as the company had earlier pledged to do.

RCN is No. 2 among the city's three cable companies. It has 77,982 subscribers along the lakefront from Rogers Park on the north to just north of Hyde Park on the south.

Its inability to expand has left Comcast -- which was formerly AT&T Broadband -- as the only cable company serving all of Chicago, with 313,174 subscribers. Comcast just raised cable rates at the beginning of the year by about 6 percent.

On Saturday, the Princeton, N.J.-based RCN said it will likely file for reorganization under Chapter 11 of the U.S. Bankruptcy Code, though it did not say when that might occur. The company also said it was continuing to meet with lenders and investors on a financial restructuring plan and that a Chapter 11 filing would be part of any restructuring that is agreed upon by the company and its noteholders.

RCN has not turned a profit since being spun off in 1997 from C-Tec Corp., which is part of what is now a Pennsylvania phone company.

RCN said it expects its Chicago customers and business would "not be impacted, we don't anticipate, by that filing," said Jim Downing, head of RCN's investor relations.

The company said it is in the process of renegotiating debt after it was unable to make a $10.3 million interest payment that was due to noteholders on Jan. 15.

The city of Chicago still expects RCN to meet its legal obligations to the city, regardless of a bankruptcy filing, Connie Buscemi, spokeswoman for the Department of Consumer Services, said Tuesday.

The city earlier this month gave RCN until Friday to make good on its obligations, or pay fines. The company could also lose at least part of a $3 million bond it paid the city years ago as part of its agreement to offer cable service in the city.

"We're not looking to drive them out of the city of Chicago," Buscemi said. "We want them to be a company that keeps its word." .

back to top