GREENWOOD VILLAGE, Colo. (CBS4)- A Greenwood Village company, backed by millions of federal dollars, is now filing for bankruptcy.
Open Range Communications filed for Chapter 11 after making massive layoff and no longer taking new customers.
Open Range offered to bring broadband service to rural and mountainous areas.
The telecom company was originally approved for a $267 million loan in 2008, the largest loan ever from the U.S. Department of Agriculture’s Rural Utility Service. Open Range ultimately received $78 million and paid back $4.5 million, still owing $73.5 million in loans from the federal government.
“While we are of course disappointed this company did not succeed, rural infrastructure loans are essential to economic development in many communities throughout the country and 99 percent of these loans are repaid successfully,” a U.S. Department of Agriculture spokesperson wrote in a statement to CBS4.
The company aimed to reach six million customers for its high speed internet services, but was only able to obtain 20,000. University of Denver Daniel’s College of Business professor Mac Clouse said trying to reach a scattered market is difficult.
“The difficulty is associated with trying to provide high-tech solutions in an area that’s just not very densely populated,” Clouse said.
Clouse suggested the government was taking a risk when it backed the company with tens of millions of dollars.
“Some people would argue that the reason we don’t want the government in lending to private businesses is the government doesn’t do its homework quite as well as the private sector does,” Clouse said.
The company declined to comment about the government loans and bankruptcy.
The telecom company is looking for a buyer. If it goes under within the next month, taxpayers foot the bill.
The federal government issued a statement stating, “The USDA will be working with the Department of Justice on behalf of the American people to protect the federal governments’ interest in the loan.”
- By Young Kim for CBSDenver.com