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Covad Aids Flashcom

February 23, 2001|Bloomberg News

Covad Communications Group Inc., an Internet service provider, agreed to buy about 24,500 customers from troubled Flashcom Inc. in exchange for as much as $3.5 million in cash and debt forgiveness. Covad will exchange $750,000 in cash and debt forgiveness up front and as much as $2.75 million more, depending on how many Internet users agree to be transferred, Covad said. The offer was approved by a U.S. Bankruptcy Court in Santa Ana, where closely held Flashcom has filed for protection. Covad sells fast Internet service connections over telephone lines. Companies such as Flashcom pay Covad to provide the Web connection for Internet service they in turn sell to their customers. Covad said last week its 2000 sales, which it has delayed reporting, may be cut because Flashcom and 18 other Internet providers aren't paying their bills. Huntington Beach-based Flashcom filed for Chapter 11 bankruptcy protection in December. Shares of Santa Clara-based Covad rose 25 cents to close at $2.06 on Nasdaq.

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