Grivner Departs, Is this the Endgame for XO and Icahn?

April 8th, 2011 by · 69 Comments

Competitive operator XO Holdings (news, filings) lost its top officer today.  Carl Grivner has announced his resignation as CEO, President, and Director after eight years, saying he intends to pursue other opportunities.  Grivner took over when Icahn bought the company out of bankruptcy after the last bubble, and has led it ever since.  He won’t be going far initially though, as he has agreed to assist the company during the transition as the board searches for a new CEO. 

But it’s not about Grivner, it never has been.  Everything that happens at XO derives from Icahn, who recently made another bid to buy out minority shareholders.  The company has not yet responded but yesterday brought in JP Morgan as an advisor to the special committee, something one would have thought they might have done two months ago.  Some of the various shareholder lawsuits are also reaching a critical point after years of delay, and the new bid is certainly going to get scrutiny from the courts right off the bat.  Grivner’s departure suggests the holding pattern the company has been in for so many years is finally coming to an end.

There doesn’t seem to be any other M&A activity, and in fact Icahn’s bid said he wouldn’t consider selling to another party.  One of the special committee members looking at Icahn’s bid has already resigned from it, apparently under some pressure though it’s hard to tell from whom.  It’s going to be difficult to find a replacement willing to walk into the crossfire that currently awaits any successor to Grivner.  A turning point then, but what lies around the corner remains hidden.  Any suggestions?

Categories: CLEC · Mergers and Acquisitions

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69 Comments So Far


  • Anonymous says:

    Looks like the company is for sale. The announcenment yesterday simply told everyone where to send in their bids (JP Morgan/Dechert). The new headless XO is even more attractive to any CEO building an empire.

    So, who is it going to be? LVLT? GLBC? PAET? a foreign company? any guesses?

  • B says:

    Wouldn’t be surprised by any of those you mentioned, especially Level 3, as XO is on its backbone and has been a thorn in its side for years.

    You might want to add Windstream as well.

  • Anonymous says:

    Rob,

    Why is everything that comes from you negative? At one point, this site was good at providing information that was relevant to our industry, but you have turned it into nothing less than a dumbed down version of TMZ. When was the last time you have written anything positive about XO, Level 3, etc?

    Great work!

    • Avatar of Rob Powell Rob Powell says:

      Sigh. I realize there are strong feelings here and I am a convenient outlet for them. I’m actually quite positive about great aspects of XO. It has great assets and great people working. I just don’t pretend like some would prefer that the rest of it doesn’t exist. I don’t tow the party line, sorry if it ruffles your feathers.

      As for Level 3, you haven’t the faintest idea what you’re talking about. As to others, no it has nothing to do with advertising or interviews – plenty of companies have never spoke to me at all.

    • brian boru says:

      Huh? I cannot believe you are serious. For a nano second I thought the post was tongue in cheek. Rob’s post was a very reasonable report on the goings on at XO. There are at least 6 pending lawsuits revolving around Icahn’s attempts to bugger the other shareholders. Icahn has been forced to settle past lawsuits when he tried to bugger the rest of us. The BOD Special Committee took 3 months to hire financial and legal counsel to respond to an offer from Icahn for us to bugger ourselves. One of these committee members recently resigned the committee. A previous Special Committee member resigned from the BOD. Icahn replaced his defense law firm with a one man shop. There have been difficulties with the depostion and subpeona process (finally settled with a signed court stipulation a couple weeks ago by XO agreeing to produce papers by May 4). And now Grivner resigns. For sure something is up at XO and Rob’s post is nothing more than a very reasonable accounting of what has to be a messy situation.

      I don’t think he deserves heat for the post.

      • Avatar of Rob Powell Rob Powell says:

        Thanks, Brian, but don’t worry – I can take it.

        It’s not really about me, but about long pent-up frustrations that have to go somewhere. Ever try to leave a critical comment on Icahn’s blog before he gave it up? :-) This is really the only independent forum that pays attention to XO at all, and when things happen there it does tend to show up here if I mention it at all. And some of those would just like it to go away, whether they have an agenda themselves or not.

        • Anonymous says:

          That is an incredibly patronizing statement. So when readers challenge your objectivity they’re expressing pent up frustration?

          I recommend that readers carefully look at your coverage of companies that grant you interviews and judge for themselves.

          Lest you forget you are a blogger, not a news organization.

          You are actually more interesting in the role of the critic rather than the sycophant.

          As a one-person show how can you possibly write a critical analysis on a company that grants you interviews? It’s a double-edged sword: a company that grants you an interview has given your website credibility (why else give you an interview?) but if you write something critical in the future they will never speak with you again. Consequently, consciously or subconsciously, you tone down your future criticism of those companies.

          You obviously think interviews are important otherwise you wouldn’t seek them out and publish them. (For the record I think your interviews are worthless.) The interview granting companies obviously think there is a value otherwise they wouldn’t waste their time being interviewed by you.

          I think the XO reader’s criticism of you is real not necessarily because your opinion is wrong but because it’s inconsistent with your more favorable coverage of companies that are no better managed.

  • Anonymous says:

    I couldn’t agree more. It’s too bad telecom ramblings is more negative on xo and l3 than it needs to be …… They say garbage sells. And it’s clear someone has to keep web site traffic for advertisers to keep paying …..

    • Add my name to the many who appreciate Rob’s work.
      Keep up the good work, and don’t waste time responding to the naysayers who are trying to control you; it’s your blog, write it as you like!

  • Anonymous says:

    it’s because LVLT and XO don’t give him interviews. He doesn’t say a bad thing about GLBC even when they consistently miss their numbers. And if you don’t think he rewards those companies that give him interviews, just look at his recent submission on Legere’s boston marathon run where Ramblings provides a picture and a really creepy shout out to Legere’s legs — eeeewwwwww!

    http://www.telecomramblings.com/2011/03/legere-to-run-7th-marathon-for-the-fight-against-cancer/

  • When has Rob said anything bad about XO and 3? says:

    When has Rob said anything bad about XO and 3? These have been two of the worst run company’s in any industry not just telecom? Are you employees of one of these pillars of industry who have never once turned a profit?

    What is bad about this article? Do you really think Icahn gives one $hit about XO and its employees? He could care less about the company. The only reason he is involved with XO is because of the massive net operating losses you have been so proficient in amassing over the years. Once he bleeds those NOL’s dry than XO will be up for sale, you will be bought out by a competitor and 70% of the delusional employees will be forced to look for work elsewhere.

    If anything Rob has been to kind to XO and its hypocritical leader.

  • Anonymous says:

    you’re now removing reader posts (2 were removed) that demonstrate how you slant your views? Incredible

    When XO beat estimates they posted “Pretty Good” numbers and when Global Crossing failed to meet their numbers your headline reads that they “Surged”.

    Also what does John Legere running in his first, fifth or tenth marathon have to do with telecom? He is hardly the only charitable executive in this industry. And your comment about his legs was creepy.

    • Avatar of Rob Powell Rob Powell says:

      Nothing was removed, you’re hallucinating. Sigh. You could always start your own site you know. That way the article titles can always match your expectations.

      • Anonymous says:

        I just prefer that the article titles match the reality. Don’t really think my or your expectations should get in the way of the facts.

      • Anonymous says:

        You HAVE removed post made by visitors, so stop lying, you are only making it worse and losing any credibility you have left. Suggesting to readers to “start their own site” is an obvious statement about your only catering to those that agree with you or buy positive press from you.

        It was nice while it lasted. Go sell some pre paid cards, Rob!

        • Anonymous says:

          Remember this one…

          You wrote…

          March 18, 2011 (4 weeks ago) at 8:03 am
          You’re right, my memory seems to be playing tricks on me today – at least I can’t find the reference I apparently dreamed I had seen. Too much caffeine perhaps. I have corrected the article.

          (corrected only when called out)

          • Avatar of Rob Powell Rob Powell says:

            And within hours. I’m not perfect, and I have had to correct things I’ve written more times than you probably ever noticed. As for being called out, it’s hard to correct something you’re not yet aware of – I appreciate it when people do let me know. Have a nice day.

        • Avatar of Rob Powell Rob Powell says:

          Indeed, I have manually removed about a dozen posts over the years. All of them have involved racist diatribes, actual libelous accusations, and anatomically impossible suggestions as to how certain public figures in this sector spend their free time. One included some particularly threatening rap lyrics, and several others threatened me more directly with bodily harm. Nobody here has done that yet, nor will they I hope. Oh, I also filter spam links offering free loans and viagra – I get about 100 per day, but that’s mostly automated.

          You’ve had your say, and can continue to have it within those rather generous limits. But I also won’t bend my opinions to your will, no matter how creative your insults might become. Hopefully you will soon realize that I’m not your enemy, and focus that anger somewhere useful.

  • T says:

    Rob–It’s a well known fact that only idiots use anonymity as a shield on blogs for stupid comments that no one else agrees with. An idiot by any other name is still an idiot though.

    Edit idiots all you want. Delete them. Your reporting on telecom our readership has time to read one of the best blogs in telecom and is thankful to you for what you do. Keep posting!!!

    Teresa

  • Anonymous says:

    It seems that Zayo may be in the gane, They have publically said they will sell to a larger investment company ( along with other options)and their original investor will cash out. It seems inevitable that XO will be taken private without its CEO. With XO a private company and Carl Iach with teh money to but out the Zayo investors I see that happening. XO and Zayo merge with Carl Icanh holding major investments in both, he then places Dan Caruso and his managemnet team as CEO and leadership of the new company.

    • the_wanderer says:

      Caruso work for Icahn? Seems like too many cooks would spoil that stew real fast.

      Zayo is said to have bid for XO a couple of years ago actually, the other way around seems unlikely right now.

  • observer says:

    For my two cents, I’ve been a reader of this blog since the beginning, and haven’t noticed unfair negativity towards XO or Level 3 — feelings run high about both companies, for sure, but I think Rob has done a good job of balancing coverage IMHO.

  • Homer says:

    Rob,

    You need to protect your work. This is by far the best blog in the industry. If you see the need to censor anything please do it, your readers will appreciate it. Editorial management of your blog absolutely critical. You don’t want to compete against the Yahoo boards on that department. No need to apologize to anyone for keeping the clutter out.

    Thanks for all your amazing hard work.

  • Anonymous says:

    As I was the original person to start this entire mess, I will end it.

    Rob, you are right, we all have a choice and you have made the choice to support your advertising clients and slam the other ones. We also have a choice and wanted to Thank you for the Telecom version of TMZ. I will not read or submit another entry.

    And “T”, good to know you are not hiding behind you anonymity.

    For the record, I don’t work for these carriers, just a former viewer of this site.

  • toddforthree says:

    rob you do a great job. how anyone can defend xo and lvlt’s operational performance the last 3 years is beyond me. you can defend the valuation (which is why i own lvlt), not the operational performance.

    by the way if you ever start a tmz site for telecom i nominate skibare as the editor. ha

  • anon says:

    this is a great blog and Rob is a dedicated and fair blogger.

    XO is a saga, not because of physical assets, photons of light or anything other than ownership (money) issues. money, debt, profits, etc., matter and pointing out who is pursuing what is fully sensible and interesting in a capital intensive business and industry.

  • Anonymous says:

    Rob does a great job choosing which bad companies and managements he’s going to applaud and which bad ones he’s going to attack.

    Rob, maybe you can tell your blogosphere how you decide to like one bad company and dislike another bad company.

  • Mike says:

    Who really cares? Its not like Telecomramblings is the NY Times. Its a internet blog site …. I agree with the one person who quoted its like TMZ online.

    That aside, is it possible perhaps Grivner was pushed ou b/c he was essentially checked out and has been for some 2 or so years? Isn’t it possible that perhaps Icahn expects more from his leadership team … say like growing more than a few percent each year? Its pretty well known that Ernest Ortega and Dan Wagner have done a pretty good job … yet the company appears to have total incompetence with the CFO and SVP of Regulatory Affairs and Access Management.

    XO would do wise by hiring either Dan or Ernest as the CEO and while they are at it replace the CFO and eliminate the SVP of Regulatory and Access. One can only imagine how effective the company would be then.

    There’s always hope …….. in the blogosphere.

    • DJ says:

      Dan “go go “Wagner future XO’s CEO?
      is the most incompetent Manager I worked for.
      please not!!!!

      • LT says:

        Really? Who would you suggest is better? Heather Gold? Laura Thomas? There BIO’s on the web site suggest they have zero clue and are incompetent. Sales guys like Ernest would be good, Wagner would be good, there’s no one else internal that could even have a chance in running the company.

        Funny DJ ….. you must think growing 1% annually is good. As an outsider and looking at the business I see that as trash.

  • Captain Clec says:

    TWTC is a perfect for XO. The sales force has minimal overlap and XO has no long term debt. Paetec could not afford XO and Level 3 has so much debt they are screwed. Windstream on the otherhand could be a viable option.

    • Homer says:

      Actually from a financial perspective XO is a better fit to LVLT than to any other company. This is because XO is completely debt free and LVLT could use XO’s balance sheet to significantly deleverage itself without tapping capital markets. An all equity XO/LVLT combination would instantly add a couple hundred million in free cash flow to the combined company and immensely lower capital/refinance costs. Not only there are operational synergies in the order of 300-400 million a year, but LVLT borrowing costs to refinance its existing debt would probably drop by over 300-400bps. The total value added to LVLT would be astronomical and probably worth the significant dillution to existing LVLT shareholders from such all equity transaction.

  • JJL says:

    Well people with good inside information said
    The game is:
    LVT /GC deal is done
    Next move LVT go after XO
    Then QUEST , and later they sell everything to ATT
    I don’t know, may be pure Hollywood speculation???
    see you in singapore!!!

    • JJL is an idiot says:

      Are those people with good inside info the janitor? Really? LVT is in debt up to their ears yet they are going to buy Global Crossing, XO, and CenturyTel or as you say it Quest. I can’t believe I am responding to this idiotic post. Who are these people?

      • Homer says:

        Any of those transactions could be structured so that one of the end results is actually the deleveraging of LVLT. As a matter of fact LVLT’s acquisition of BWNG deleveraged LVLT. Sunit would have no problem coming up with such transaction for almost any acquisition target. Obviously such deal would be highly dillutive to LVLT shareholders… and has to be properly executed.

        So, the real questions are: how much dillution are LVLT shareholders willing to stomach? and can LVLT management deliver on the execution?

  • ES says:

    It is laughable that Rob is biased against Level 3 or XO. The difference btw optimism and pessimism is really only discernable by realists – seems like we lack realists on this blog from time to time. I think you run a very fair site Rob. I think the question that remains unresolved for me is the cause pf the Grivner departure Icahn frustration of him not being the bride in this rumored GC deal.

  • CarlK says:

    Whoa! This is almost as bad as me and that hidden pseudo, Enron, sparring! :-)

    There’s frustration alright! Its cause; however, is the Wall Street wolves haven’t seen “the natural consolidator,” LVLT, make their move to purchase something for way too long while they’re ITCHING for IB fees!

    That frustration has come about by the discipline which had to be invoked by (3)’s financiers who are adamant that Jim Crowe will not overpay with past history as the guide tied to stock price and in spite of touted assets.

    Do you remember Jim’s last conference? “We’re not going to overpay!”

    As a (3) owner, that makes me very comfortable waiting for whichever acquisition crosses the wire at whatever time (3)’s sheriffs believe it’s time to pounce!

    Enron’s not going to find any post synergy EBITDA MULTIPLES paid to ICON from (3), at least, with respect to his Super Nova theories. He better call Paul Sagan for advice!

    Rob has absolutely pandered a bit on HIS blog as Anonymous has stated, but he still provides an outstanding informational site for a one man shop.

    As he said, he’s not perfect, nor are the rest of us.

    Hey Rob, at least you haven’t provided a picture with Enron or someone else here, with their heads up their ass just yet! :-)

  • Tony D says:

    And XO people are going to probably lose their jobs. This sucks in this market

  • Doodles says:

    Grivner’s been at XO for 8 years with Icahn. That has to be like 56 years normal time. Give the guy the benefit of doubt. He’s been stable, rational, and not one of the characters that so many executives in this industry have become. As for XO’s fate, Icahn will sell when he believes he has maximized his investment. The Global Crossing acquisition by Level 3 just takes one more combination off the table, making Icahn’s investment a little more attractive. At some point, there won’t be anything left worthy of acquisition.

  • Captain Clec says:

    Rob – if you had to rank the companies that would purchase XO what how would you list them? TWTC; PAETEC; WINDSTREAM; CENTURY LINK – am I missing any one missing?

  • Parkite says:

    Just getting around to reading this. XO and Apple must share a common shareholder base. Rob, keep up the great work!

  • Dogma says:

    So the company now has all these key GBLX people in place for …what? They’ve been less then marginal accelerating growth by 1% and reducing the company by 20%. Why can’t Icahn do everyone in telecom a favor and sell XO to a viable entity like a cable company. Word is he wants $ 2B.

    • Icahn is a crook!!! says:

      Icahn wants $2 billion? Funny, his $.70 offer to minority shareholders values the company at less than a billion.

  • Water Pumps says:

    Just getting around to reading this. XO and Apple must share a common shareholder base. Rob, keep up the great work!

    • Anonymous says:

      despicable human being who only cares about getting richer and telling stories of how “tough” he had it getting there. No tougher then all the people’s lives he has destroyed by shattering companies and selling off the profitable pieces. I worked for and with him for a few years and vowed never, ever to work around a barbarian like this again. Grivner was well known for watching CNN in his sweat pants at 3:00pm in the afternoon getting ready for his workouts. Trust me, what’s left, other then Ernie are a bunch of “D” leveles trying to be “C’s”. Why do you think there has been virtually zero outside talent?? No one can handle the final interview with Icahn.

  • Puppet board says:

    When is the puppet board going to respond to that hypocrite-scumbag $.70 offer?

  • Anon says:

    is XO still around ?

  • Channel Chief Law Resigns. says:

    Is Icahn going to have anyone left?

    XO Communications Inc. confirmed Thursday that its channel chief, Brian Law, has resigned his post to pursue an entrepreneurial endeavor. Law will remain with the company at least through May as the company searches for a replacement. Meanwhile, the channel organization will roll up to Mike Toplisek, chief marketing officer for XO Business Services.

    The news comes three weeks after the company’s longtime CEO Carl J. Grivner announced he was stepping down after eight years.

  • Who's next? says:

    The rats keep abandoning Icahns sinking ship.

  • Anonymous says:

    Is Wagner doesn’t get the CEO job he’ll be next.

  • Anonymous says:

    Is it possible that the act of doing nothing is in fact doing exactly what he (icahn) wants? Isn’t it plausible that losing institutional knowledge such as those key individuals leaving lessens the overall value of the company in aggregate thus lowering what he (icahn) might pay to take the remaining assets and shut down the r2 litigation? If this is possible I’d expect to see more losses of people for the next several months.

  • No one will pay what Uncle Carl thinks its worth, so its going nowhere soon. XO will continue to trudge along in middle mediocrity.

    Dan Wagner was bought in with a CEO’s salary and comp package, which tells me he was really hired to replace Grivner.

    Brian Law is a great leader, but I have a hard time believing his “institutional knowledge” leaving lessens the overall value of XO.

    • yourmortgage says:

      You might be right on this, unless he can get 2.5B give or take, he might just set on this for awhile. I think the customer base is growing and revenue will be up sometime in the future.

  • JJL says:

    Anyone know what’s going with the CEO search? The company seems too quiet? Is it in the process of being sold?

  • laura says:

    We should know soon. My bet is Icahn goes one of two directions – names CEO from internal selection or he sells. Not much more really ….

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