XO Communications Inc. was scheduled Monday to seek confirmation of a plan that would allow the Reston, Va.-based provider to emerge from bankruptcy.
The restructuring agreement stipulates Forstmann Little and Telefonos de Mexico S.A. de C.V. would invest $800 million in the company for a combined 78 percent stake.
Lawyers representing the proposed financiers have cited the decline in the value of XO among other factors as grounds for it being "virtually impossible" to satisfy the current purchase agreement.
But XO has rejected that claim.
A second restructuring alternative includes a stand-alone plan that would convert $1 billion in loans under its secured credit facility into common equity and $500 million of junior secured debt. Under the plan, XO noted it also might issue common equity through a $250 million rights offering to senior unsecured creditors.
On Friday investor Carl Icahn offered to buy approximately $420 million of XO's senior secured loans for 50 cents on the dollar, a move that would allow his investment firm, High River Limited Partnership, to gain control of the company, The Washington Post reported.
An XO spokesman did not immediately return a phone call Monday seeking comment.
