XO Seeks to Bar Gores from Buying C&W Unit

X0 Communications today sought to have lead bidder Gores Technology Group disqualified from an auction for Cable & Wireless' U.S. hosting assets, saying Gores had tampered with XO's efforts to prepare a competing bid, which XO filed late Friday.

In a court filing just hours before the bid deadline, XO said it learned Tuesday that Gores had hired away the XO executive directing a planned joint bid with One Equity Partners, a unit of Bank One Corp. Gores said the motion was "nothing more than thinly-veiled attempt to disrupt the bidding process," and amounted to gamesmanship by XO chairman Carl Icahn.

XO said Executive Vice President Brian Oliver left the company Tuesday to take a position with Gores, undermining XO's ability to compete in the auction. "At this critical stage of the auction and sale process, XO is without its key officer who had guided XO's acquisition efforts and negotiations with (One Equity Partners)," XO said in its filing, adding that Gores' actions could have a "chilling effect" on the sale process.

In a statement late Friday, Gores contested XO's version of events, saying Oliver left with the blessings of XO management. Oliver "told XO's CEO Carl J. Grivner of his opportunity to join GTG," Gores said. "Mr. Oliver offered to refrain from joining GTG until after the bidding process for the Cable & Wireless assets had been completed. Mr. Grivner gave Mr. Oliver his blessing to join GTG immediately."

"We have had no discussions with Mr. Oliver about XO's strategy relating to Cable & Wireless," Gores added. "Our discussions were purely on an operational level. This is a classic Carl Icahn tactic."

Cable & Wireless America (CWA) filed for Chapter 11 protection Dec. 8 as part of an agreement to sell the hosting unit to Gores for $125 million. Qwest and Koch Data Centers LLC have sought an extension until Tuesday to review documents and submit bids.