New York-based wireless telecom company WinStar Communications Inc has agreed to purchase nearly all the assets of Midcom Communications Inc, a national long distance and frame relay provider that is currently in bankruptcy proceedings. Winstar will hand over $92m in cash for what amounts to an $80m-a-year long distance business, a sales force of 200 people and the PacNet Inc frame relay unit, which pulls in about $20m annually. The real price of the deal could amount to as little as $70m after WinStar collects about $20m in acquired accounts receivable. Under the agreement, WinStar will provide employment for roughly all of Midcom’s employees and will maintain its key distribution channels. Due to bankruptcy code procedures, the proposed deal will be submitted to the bankruptcy court for approval and, if accepted by the court, other interested buyers have the opportunity to top WinStar’s offering price. Midcom and its subsidiaries filed for Chapter 11 protection on November 7.
