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Teleglobe files for bankruptcy protection
New York, May 15 - Teleglobe Inc. filed for bankruptcy protection in the Ontario Superior Court of Justice.
The filing under the Canadian Companies' Creditors Arrangement Act will also be followed by similar filing in the U.S. and U.K., Teleglobe said.
Teleglobe, based in Montreal, Quebec and Reston, Va., said it will also reorganize its strategy to focus on its core voice and related data business.
Teleglobe will exit from its hosting business and part of its data transmission business, a move it said will free it from the high costs associated with recently built infrastructure, primarily developed to support the discontinued data and hosting operations.
Teleglobe's workforce will be reduced by 850, leaving 950 people. Half of the job losses will be in the U.S. and 15% in Canada. Most are related to the data and hosting operations.
John Brunette was named chief executive officer. He was previously executive vice president and chief administrative officer. Executive vice president of voice Serge Fortin was named chief operating officer. Charles Childers resigned as president.
Teleglobe said it obtained US$100 million of debtor-in-possession financing from BCE Inc. which will be used to support the core business, including servicing customers and the payment of wages and benefits.
"Our primary objective is to maximize the value of the company for all stakeholders," said Brunette in a statement. "This strategy allows us to be free of a financial burden and focus on our core business, which has been built over a 50 year period."
Teleglobe said the core business is expected to generate free cash flow and be self-funding, once freed from its current high cost structure. It will be headquartered in Montreal.
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