Supra agrees to pay a rival $18M

After years of haggling over bills, Supra Telecom has agreed to pay BellSouth $18 million -- far less than the $118 million the telecommunications giant claimed to be owed 16 months ago.

The agreement was reached in U.S. Bankruptcy Court late last week. While it was part of court proceedings and approved by U.S. Bankruptcy Court Judge Robert Mark, details of the settlement were nonetheless sealed.

Judge Mark also denied Supra's request that it be allowed to negotiate exclusively with H.I.G. Capital Partners, a Miami-based venture-capital firm that has expressed interest in buying a majority stake in Supra.

The bankruptcy court said it would like to see the letter of intent reworked to allow other bidders to come forward, if interested.

Russ Lambert, Supra's president and newly appointed CEO, said Supra was negotiating a new letter-of-intent agreement with H.I.G. to address the judge's concerns.

Resolving the billing dispute so far with BellSouth, he said, clears a hurdle in finalizing a reorganization plan. The $18 million to BellSouth would be paid when Supra emerges from bankruptcy.

A BellSouth spokeswoman confirmed that a confidential settlement had been reached but otherwise declined comment.

The billing dispute was the main reason that the Miami-based Supra, a rival local phone company that leases facilities from BellSouth to provide phone service, filed for Chapter 11 bankruptcy protection in October 2002.

Because BellSouth demanded immediate payment and Supra didn't pay, BellSouth cut Supra off from the computerized system it had been using to process new customer orders in September 2002. Having no access to this system meant Supra couldn't process new customers or change features on existing customers' calling plans.

In late November 2002, the court ordered BellSouth to grant Supra access to the computerized ordering system once again. Supra was ordered to pay BellSouth $7 million each month for the pieces of the BellSouth network that it leases to provide services to its customers.

The companies still have to resolve disputed bills from July through September 2002.

Supra also said last week that Lambert, who replaced Supra founder Kay Ramos as CEO, had been named a director of the company. Ramos, while still the majority shareholder, is no longer on the board, but he is retained as a consultant.

Supra also announced that it had added two outside directors: Tony Brunson, senior audit partner at Sharpton, Brunson & Co., a top accounting firm in Florida, and Ben Feinswog, a Miami-based consultant with turnaround experience in restaurants and construction who has also worked in banking, insurance, pharmaceuticals and real estate.