Highland Capital, which holds 8 percent of the senior debt in Bridge, has filed a petition to force Bridge into bankruptcy. The petition was filed in federal bankruptcy court in St. Louis. Analysts said Highland is apparently trying to push Bridge into the bankruptcy proceedings instead of letting negotiations between the company and its creditors continue.
Bridge, a financial news and information company that uses Savvis' network to distribute its content, owns 46 percent of Savvis' stock and represents approximately 80 percent of the $104 million revenue Savvis generated for the nine months that ended Sept. 30.
If Bridge is forced into bankruptcy, then a major portion of Savvis' revenue could be in jeopardy. Savvis would become the latest among many to be caught in a huge downdraft affecting all corners of the telecommunications industry.
Shares of Savvis, a company the provides Internet access, data transport and related network services to businesses and Internet service providers, fell to $1.31 before recovering slightly. The shares closed down 50 cents, or 23 percent, at $1.63.
Savvis priced its initial public offering last year at $24 a share and its shares hit a high of $28 last February during the company's first day of trading. But the stock has since dived to a low of 75 cents (in December).
Bridge, which owes as much as $800 million to bank creditors, has been in talks with private investment firm Welsh, Carson, Anderson & Stowe, which is its largest shareholder, and other groups over a recapitalization and debt-restructuring plan.
Welsh, Carson, which also owns 16 percent of Savvis, said that it has been discussing plans with Bridge for several weeks that could result in a $150 million cash payment to the troubled company.
Dan Renouard, a vice president of research at Robert W. Baird said he believes that Highland (one of Bridge's smaller creditors) may not have liked how the debt restructuring talks were proceeding. "It sounds like they didn't like the terms of the deal," he said.
But the analyst still asserts that Savvis should come out of the proceedings intact. Bridge said it might seek the dismissal of the filing or might convert the petition to a voluntary bankruptcy case, which makes it easier for creditors and the company to work together on a restructuring plan and keeps the major decisions out of court.
Bridge said it will continue to fulfill obligations to clients and also announced that it will continue to pay employees' salaries and benefits.