As expected (11/19/98), Rocky Mountain Internet Inc has countersued its fellow Colorado ISP and one-time acquisition target, Internet Communications Corp over the aborted acquisition. ICC sued RMI in October for $30m after RMI withdrew from the deal, but RMI has hit back hard, counter-suing for around $175m, or perhaps more, to recover the amount RMI was trying to raise as a debt offering to finance the ICC acquisition and other projects. ICC had no comment on the countersuit. As of September 30, ICC had only $69,000 in the bank and recently had to issue convertible stock to raise $2m from Interwest group Inc, a wholly-owned subsidiary of Anschutz Co in order to maintain its assets at $2m – one of the three requirements of a Nasdaq Amex listing. The exchange had threatened the company with de-listing, a process that it still not resolved. The acquisition was abandoned by RMI after it said it had discovered material differences in ICC’s finances that it had not been shown earlier. The RMI suit also names Anschutz and ICC lawyers, Holme Roberts & Owen. RMI chief executive Doug Hanson said that following a three week road show in July and August to raise interest in the debt offering, RMI was due to price its offering on August 10 and close it two days later. Soon after, the market for high yield debt offering collapsed following the crisis in Russia and still hasn’t fully recovered. As a stop-gap, RMI arranged a bridge loan to cover just the cost of the acquisition, about $38m, but RMI did not exercise that option because it withdrew from the deal. ICC didn’t manage to get shareholder approval by that time, but did so later. However, by then the market for such debt offerings had disappeared, says RMI. Hanson says although the suit does not name a specific amount, it could be seeking more by the time the case comes to court.
