Excite@Home’s Future Bleak as Loan Comes Due

PALO ALTO — The outlook for Internet access provider Excite@Home Corp. dimmed further Monday when the company received demands that it must repay $50 million by Friday.

Excite@Home, which has little cash left and $1 billion in debt, said it was contesting that demand, but added that if it is forced to repay, it could have a “materially adverse” effect on its liquidity and ability to fund operations.

Shares of Excite@Home, formally At Home Corp., fell 11 cents, or 22%, to close at 39 cents on Nasdaq.

A spokeswoman for Excite@Home, whose controlling shareholder is AT&T; Corp., declined to comment on the possibility of a bankruptcy or a complete shutdown, saying the company’s situation is a “quickly escalating legal matter.”

“You can assume we’re looking at all scenarios that are available to us,” she said.

Excite@Home’s latest debt crisis follows the recent drop in its stock to below $1 a share. The company earlier raised $100 million from two different lenders to fund its operations. But the debt carried the stipulation that issuers could call it back if Excite@Home’s stock were delisted.

One of those lenders, Promethean Investment Group, has now called for repayment saying the company “breached certain representations” made when the debt was issued. Excite@Home said it has not heard from the other lender.

While Excite@Home’s stock has not been delisted from Nasdaq, a sustained price below $1 a share is grounds for delisting.

The spokeswoman for Excite@Home said the company was contesting the demand for the repayment and pointed out that its stock had not been delisted. She said she was unaware of any notification of Nasdaq alerting it to a possible delisting.

Monday’s developments follow news last week that Excite@Home’s former auditors, Ernst & Young, had questioned its ability to continue as a going concern, because of its mounting debt, steep operating losses, and flagging share price.

Although Excite@Home has since hired new auditors, the company’s recent results, including $346 million of losses in the latest quarter, point to its dire financial situation.