Riverstone stockholder objects to asset sale bidding procedures, requests official equity committee

By Caroline Salls

Pittsburgh, Feb. 22 - Riverstone Networks, Inc.'s proposed bidding procedures for the sale of its assets drew objection Wednesday from Xerion Partners II Master Fund Ltd., which also asked the U.S. Trustee for Riverstone's bankruptcy case to appoint an official committee of equity security holders, according to a filing with the U.S. Bankruptcy Court for the District of Delaware.

According to the objection, an official equity holders committee is necessary in the case because Riverstone's estates are "considerably solvent."

Xerion said if the proposed asset sale to Lucent Technologies, Inc. goes through as expected, there could be as much as $98 million in sale proceeds available to satisfy administrative claims and to distribute to Riverstone stockholders.

The objection also said an equity committee will serve as the company's primary counter-balance since equity value is going to fund the Chapter 11 cases, and Xerion said Riverstone's management is not well situated to protect the interest of stockholders.

In addition, Xerion said the proposed sale may not be in the best interest of the company's estates, since little is known about the pre-bankruptcy sales process.

Xerion said the "quiet" pre-bankruptcy process raises questions as to whether the assets and businesses were marketed in an appropriate fashion and whether Lucent's offer was the best and highest available.

Xerion said a hold should be put on the sale process until the U.S. Trustee has an opportunity to consider appointing an official equity committee.

A hearing on the bidding procedures is scheduled for Thursday.

Riverstone, a Santa Clara, Calif., provider of carrier ethernet routers, filed for bankruptcy on Feb. 7. Its Chapter 11 case number is 06-10110.

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