Riverstone offers debt explanation
Riverstone Networks tried to explain on its Web site why its bankruptcy filing shows that it is $30 million in the hole, even though previous statements showed the company had $120 million cash on hand.
The difference is crucial to stockholders, who will get left holding the bag following the company’s Chapter 11 filing last week. The company filed for bankruptcy as part of a deal in which Lucent Technologies would acquire almost all of its assets For $170 million.
If the company were in the black, shareholders could get as much as $1.30 a share for their stock — if Lucent’s bid is approved by the bankruptcy court, and even more if a higher bid is accepted. If Riverstone is deeply in debt, they may receive offers in the range of 75 cents a share.
The stock was selling at $1.07 a share when trading halted on Friday Feb. 10, only a few days a few days after the bankruptcy filing. The Securities Exchange Commission instigated the halt after it barred the public sale of Riverstone’s stock. The decision – which ended a long-standing investigation into allegations that the company inflated revenue – came about after years of the company’s failure to file required audited financial statements.
The Santa Clara, Calif.-based Riverstone is one of the two units spun off into public companies in 2001 by the former Cabletron Systems, the Rochester-based firm co-founded by former Gov. Craig Benson. – BOB SANDERS