Subject: [NEXTEL-1] Out of money, Monet Mobile will shut down

From: Marcelrf <[email-masked]>
Date: Mon, 08 Mar 2004 07:42:28 -0500

Saturday, March 6, 2004

Out of money, Monet Mobile will shut down
Attempt to renegotiate financing terms fails

By JOHN COOK
SEATTLE POST-INTELLIGENCER REPORTER

Monet Mobile Networks, which raised $85 million to build wireless
Internet networks in Fargo, N.D., Duluth, Minn., and six other
Midwestern cities, filed for Chapter 11 bankruptcy this week after a
financing deal collapsed.

The Kirkland company laid off its 34 employees and notified its 3,000
subscribers that Internet service would be terminated by April 2.
Chairman and Chief Executive George Tronsrue III -- the former president
of XO Communications -- resigned on Thursday.

"It is a sad story and kinda falls in the category of sometimes bad
things happen to good people," Tronsrue said. "Sometimes bad things
happen to good companies."

The company listed more than 50 creditors and assets topping $10
million.  Yesterday, a bankruptcy judge granted an emergency motion to
have a trustee oversee the company's assets.

Founded in 1999, Monet Mobile Networks boasted an experienced management
team, deep-pocketed investors and a technology that allowed customers to
surf the Internet from any location within a city. Customers paid $89
for a wireless modem and $40 per month.

While the company was adding customers in the eight cities where it
offered service, Tronsrue said, the board of directors decided to pull
the plug after a series of investment deals fell apart.

In September, Tronsrue received an offer for a credit facility for about
$30 million. But as part of the financing package, Tronsrue said, he had
to renegotiate with the existing investors -- a process that ultimately
failed.

"We worked at that for several months and we were not able to get it
done," Tronsrue said. "We could not obtain the agreement of the creditor
to subordinate to the new money."

When that deal didn't work, the company obtained bridge financing in
December and started looking for a buyer.
It targeted a dozen potential suitors, but at the end of January the
investor who provided the short-term financing pulled out of the deal.
"That created a pretty immediate cash crisis," Tronsrue said.

Bringing high-speed Internet access to rural markets is a capital
intensive business.

Monet Mobile operated 57 cellular base stations in the markets it served
and ran two data centers, in Duluth and in Sioux Falls, S.D. It also
secured wireless spectrum in 16 markets in the Midwest.

Despite the high costs and challenges of operating in rural markets,
Tronsrue doesn't think the company failed because of a lack of interest
in the technology.

"It worked as well as we hoped it would work," he said. "I don't think
being later than earlier would have made a difference. What made all the
difference was having the money."

Investors in the company include Mayfield, Soros Private Equity, Hook
Partners, Qualcomm and LG Electronics.
Tronsrue, 47, said he plans to take some time off this spring and summer
to evaluate his options.

http://seattlepi.nwsource.com/business/163532_monet06.html
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