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XO to Court: Set Aside Gores Bid

Carrier Hotels Staff Posted Jan 16, 2004

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The bidding for Cable & Wireless' US hosting arm heated up Friday as X0 Communications asked the bankruptcy court to disqualify the current lead bid from Gores Technology Group, saying Gores had tampered with XO's efforts to prepare a competing bid. Late Friday XO confirmed that it had joined the bidding.

With hours left before the 5 p.m. bidding deadline, XO said it learned Tuesday that Gores had hired away the XO executive directing a planned joint bid with One Equity Partners, the private equity arm of Chicago's Bank One Corp.

Gores said the motion was "nothing more than thinly-veiled attempt to disrupt the bidding process," and amounted to gamesmanship by XO chairman Carl Icahn.

XO said Executive Vice President Brian Oliver left the company Tuesday to take a position with Gores, and that its ability to compete in the auction "has been compromised by Gores's misconduct."

"At this critical stage of the auction and sale process, XO is without its key officer who had guided XO's acquisition efforts and negotiations with (One Equity Partners)," XO said in its filing. "XO believes that Mr. Oliver has shared with Gores information regarding XO's strategy and negotiations between XO and OEP concerning a bid."

Gores contested XO's version of events, saying Oliver left with the blessings of XO management. Oliver "told XO's CEO Carl J. Grivner of his opportunity to join GTG," Gores said. "Mr. Oliver offered to refrain from joining GTG until after the bidding process for the Cable & Wireless assets had been completed. Mr. Grivner gave Mr. Oliver his blessing to join GTG immediately.

"We have had no discussions with Mr. Oliver about XO's strategy relating to Cable & Wireless," Gores added. "Our discussions were purely on an operational level. This is a classic Carl Icahn tactic."

Cable & Wireless America (CWA) filed for Chapter 11 protection Dec. 8 as part of an agreement to sell the hosting unit to Gores for $125 million.

Qwest and Koch Data Centers LLC have sought an extension until Tuesday to review documents and submit bids.

Media reports have mentioned interest from other suitors, including Level 3 Communications, WilTel Communications, Oaktree Capital Management and Cerberus Capital Management.