News

Excite@Home Tries to Void Cablevision Warrants

7/09/2000 8:00 PM Eastern

Excite@Home Corp. struck back against Cablevision Systems Corp. last week, asking a Delaware court to rescind Cablevision's warrants to buy Excite@Home stock.

The request, made June 30, was the latest maneuver in a conflict that began when Cablevision filed a lawsuit in Delaware Chancery Court attempting to block a deal that would give AT & T Corp. additional voting control of Excite@Home.

According to documents filed with the Securities and Exchange Commission, Excite@Home filed counterclaims in Delaware that sought to cancel the Cablevision warrants and sought monetary damages from Cablevision.

Excite@Home also wants a decree requiring Cablevision to comply with the provisions of its distribution agreement with Excite@Home.

The amount of money damages sought was not revealed.

Cablevision fired off a response in a prepared statement July 3. "Excite@Home's counterclaims are a transparent attempt to deflect attention away from its breach of Cablevision's rights as a party to the stockholders' agreement," Cablevision said.

"Excite@Home, AT & T, Cox [Communications Inc.] and Comcast [Corp.] secretly negotiated a transaction that would surrender control of the company to AT & T in violation of that agreement," the statement continued. "Cablevision looks forward to prevailing at the trial scheduled for September, and it will have no further comment until such time as it is appropriate."

Excite@Home officials could not be reached at press time, but in an earlier statement, the company said Cablevision's claims have "no legal merit" and that it would "vigorously defend this action."

According to the earlier deal between AT & T, Cox, Comcast and Excite@Home, AT & T would increase its voting control of Excite@Home to 74 percent from 56 percent, and offered to eventually buy out Excite@Home's other cable partners-Comcast and Cox-at $48 per share.

Comcast and Cox-which own warrants to purchase 7.8 percent and 7.3 percent of Excite@Home stock, respectively-also agreed to relinquish their veto control over Excite@Home and their board seats at the high-speed-data company.

Cablevision, which owns warrants for 21.8 million shares in Excite@Home, was left out of the deal. Cablevision's warrants represent about 5 percent of Excite@Home's outstanding stock and about 3 percent voting control.

On June 19, Cablevision filed a suit claiming breach of contract after previously disclosing that it felt it had to consent to the Excite@Home arrangement in order for it to proceed.

Cablevision's ability to exercise its Excite@Home warrants is based on the number of homes delivered to its service. While Cablevision said it is in compliance with its agreement with Excite@Home, the MSO has not delivered many such homes.

Of Cablevision's 52,000 high-speed-data customers, only 10,000 receive Excite@Home. The rest get Cablevision's own "Optimum Online" service.

It appeared the disagreement might be worked out amicably when AT & T, Cox and Comcast agreed not to complete their Excite@Home deal until Cablevision had its day in court.

Excite@Home also asked the court to accelerate the trial to Sept. 6.

That date could be important because the cable partners have the ability to walk away from the deal on the table after Sept. 30.

September