Henry Luken, Covista owner
Henry Luken's Covista Communications, Inc. (NASDAQ symbol: CVST) today announced reductions in staffing totaling approximately 26% of the company's total workforce.
Officials said the staffing cuts "reflect the continuing effects of the events of September 11, when Covista lost the use of its New York City telecommunications switching facility for several weeks."
Mr. Luken, Covista's owner, lives at Soddy-Daisy and last October announced plans to move Covista's headquarters from New Jersey to Chattanooga. He bought the Maclellan Building downtown for the company headquarters and opened a call center in the former Kmart bulding on Highway 58.
Mr. Luken also began construction of a new switching center on Main Street near Central Avenue.
Mr. Luken said the cutbacks "are all in New Jersey and do not affect Tennessee."
He said some 100 workers are on the job at the call center on Highway 58 and that equipment is currently being installed at the switching center on Main Street.
Mr. Luken, who is the chairman of the board and primary stockholder of Covista but is not an officer of the public firm, said work should begin in 2-3 months on getting offices ready at the Maclellan Building for Covista.
John Leach, Covista's president and CEO, said, "Covista has been experiencing, with many other companies, the challenge of sustaining its business in the aftermath of September 11. The cuts we have made bring our staffing levels more in line with our current business."
About Covista:
Covista is a facilities-based long distance telecommunications, Internet and data services provider with a substantial customer base in the commercial, wholesale and residential market segments. Its products and services include a broad range of voice, data and Internet solutions, including long distance and toll-free services, calling card, frame relay, Internet access, VPN, directory assistance and teleconferencing services. The wholesale division provides domestic and international termination services to carriers worldwide at competitive rates.
Covista currently owns and operates switches in New York City, Newark, New Jersey, Philadelphia and Dallas, and previously has announced plans to expand to additional switch sites in Las Vegas, Chicago and Chattanooga.
Covista previously announced that it has acquired access to nation-wide telecommunications network facilities comprising 2,822,400,000 DS-0 channel miles of additional capacity.
Covista operates a Network Operations Center in Little Falls, New Jersey to monitor its switched network, as well as call center and information technology facilities in Chattanooga to coordinate its various services.
Mr. Luken, who earlier became wealthy after building up another phone company, had acquired Covista with plans for an aggressive new effort at low-rate residential telephone service.
At the October announcement, Mr. Luken said some 60 workers have already been hired and they are being taught how to train other employees. He said another 150 persons had agreed to come to work there and were awaiting a call from the company.
The call center is due to go into operation Nov. 1, he said then.
The firm was then building the $2 million switching center here and had plans for some 7-8 other switching centers throughout the country.
The company has served mainly the Northeast, but is expanding nationwide, Mr. Luken said then.
The Chattanooga switching center will serve as far as Florida and Kentucky, he said.
COVISTA COMMUNICATIONS, INC.
FACT SHEET GIVEN OUT LAST OCTOBER
Covista Communications, Inc. is a publicly-traded (NASDAQ symbol: CVST) facilities-based long distance telecommunications, Internet and data services provider with a substantial customer base in both the commercial and wholesale market segments. Its products and services include a broad range of voice, data and Internet solutions, including long distance and toll-free services, calling card, frame relay, Internet access, VPN, directory assistance and teleconferencing services. The wholesale division provides domestic and international termination services to other carriers worldwide at competitive rates. The Company formerly was known as Total-Tel USA Communications, Inc.
Formerly based in Little Falls, New Jersey, Covista now is expanding its operations and moving its corporate headquarters to Chattanooga. Initially, the Company’s offices will be at 4801 Highway 58 North, in what was formerly a shopping center property that has been totally renovated. The new facility houses a call center to accommodate up to 200 seats for the Company’s expanding residential business. The facility also will be capable of handling many of the Company’s back-office operations in the coming months. Covista currently employs nearly 60 people in the Chattanooga operations center.
Ultimately, it is expected that the headquarters will be located in the downtown business district, in a building that was recently acquired and is considered to be a Chattanooga landmark. The company also plans to retain offices in New Jersey to support certain of its businesses that are based there.
Covista currently owns and operates switches in New York City and Newark, New Jersey. An additional switch site in the Philadelphia area is expected to be integrated into the Covista network when the previously-announced acquisition of Capsule Communications, Inc. is completed by the end of this year. Covista also has announced previously that the Company plans to acquire or build new switch sites in Las Vegas, Chicago and Dallas, in addition to Chattanooga.
Earlier this year, Covista acquired access to other nation-wide network facilities comprising 2,822,400,000 DS-0 channel miles of telecommunications capacity. The Company’s Network Operations Center currently is housed in the former headquarters building in Little Falls, New Jersey.
The Company recently provided valuable assistance in the wake of the World Trade Center disaster by providing emergency telecommunications services to the managing entity of the Business Improvement District (“BID”) which services the World Trade Center area, commonly known as the Downtown Alliance. Covista was able to take advantage of the fact that its Manhattan facilities are in the same building as the BID. The Company’s engineers were able to run a direct cable connection from Covista’s switch to the BID offices, providing essential services under circumstances in which they would not otherwise have been available.
The Covista Board of Directors is chaired by Henry Luken, who has long maintained his base of business operations in Chattanooga. Mr. Luken now is joined in the Company’s Chattanooga offices by Covista’s President and Chief Executive Officer, John Leach.
Chattanooga will serve as the national base of operations for Covista’s new residential long distance service, which is aggressively priced at 3 cents per minute with a monthly service charge of $3.00. This rate is substantially below any currently available national rate and is available 24 hours per day, 7 days per week and 365 days per year on all interstate calls within the 48 contiguous United States.
Covista’s revenues in its last complete fiscal year which ended on January 31 were in excess of $133 million. Covista’s operations were cash-flow positive for its second fiscal quarter ended July 31, 2001. It is not yet known what effect, if any, the events of September 11 will have on the Company’s revenues for the current quarter.
Covista has undertaken an ambitious goal to become the nation’s pre-eminent low-priced long-distance carrier, at a time when major losses by many existing competitors are mounting. What has distinguished Covista is its ability to capitalize on the near “fire sale” prices now available nation-wide for telecommunications infrastructure. In addition, the Company has been diligent in avoiding the excessive debt loads that have led to the demise of other prominent telecommunications services providers.
Covista also hopes to take advantage of the lower cost of living and certain lower corporate overhead expenses that are anticipated from relocating its headquarters and a large portion of its operations to Chattanooga.