The company filed for bankruptcy this year along with other upstart telecom companies such as wholesale carrier Global Crossing and Network Plus, which provides local and long-distance phone service.
McLeod did not disclose financial terms of the sale but said it expects the deal to close by the end of the third quarter this year. The company acquired CapRock in December 2000 for about $532 million in stock and debt. CapRock provides telecom and satellite services to the oil and gas industry operations located in the Gulf of Mexico and the North Sea.
McLeod is not the only telecom carrier grappling withloads. Qwest Communications International, an established Baby Bell carrier, is considering the sale of assets to some of its debt.
McLeod had made several acquisitions to expand its business, but also raised cash through debt offerings. The company bought ISP (Internet service provider) Splitrock in 2000 for $2.1 billion and spent $40 million for Intelispan last year, a company that provides VPN (Virtual Private Network) services.
But McLeod did not reach a profit in 2001, and at the beginning of this year it announced it could not make interest payments on about $1.13 billion in debt, which eventually led to the company filing for bankruptcy in January.
McLeod sold its Internet assets to Level 3 Communications for an undisclosed amount last year and made deals this year to sell its telephone directory publishing business to the Yell Group for $600 million. McLeod also sold its wireless licenses for about $100 million to a group of buyers.
McLeod's bankruptcy reconstruction will eliminate $3 billion in debt from the company's books and give a 58 percent stake of the company to investment firm Forstmann Little.