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Metromedia Fiber warns of possible bankruptcy :-(
Monday March 18, 9:49 am Eastern Time
Metromedia Fiber warns of possible bankruptcy
(UPDATE: Adds details)
NEW YORK, March 18 (Reuters) - Metromedia Fiber Network (NasdaqNM:MFNX - news), which provides high-speed communications services in cities, on Monday scrapped its financial guidance through the end of 2002, and warned it may have to file for bankruptcy if it cannot restructure its debts.
The New York-based company, in a press release, also said it had deferred payment of about $30 million of interest due on $975 million of convertible notes issued to local telephone company Verizon Communications(NYSE:VZ - news) in order to meet other near-term cash requirements.
Metromedia said it is in talks with Verizon but could default on its debt if it fails to reach an agreement or make an interest payment within a 30-day grace period.
Metromedia said it is seeking to restructure its debts. As of Feb. 28, it had $3.3 billion of consolidated debt and about $37.3 million in cash. A restructuring could substantially dilute the value held by stockholders, the company said.
The downturn in the telecommunications industry triggered the recent bankruptcies of Global Crossing Ltd. (Other OTC:GBLXQ.PK - news) and McLeodUSA Inc. (NasdaqNM:MCLDQ - news) The sector has been hurt by a glut of high-speed network capacity, scant demand in the weak economy, price wars and stiff competition.
To raise cash, Metromedia said it plans to sell the facilities of its Internet exchange, PAIX, for about $50 million cash and an equity interest in the buyer. A substantial part of the proceeds from the sale, expected to close in the second quarter, will be used to pay down debt, it said.
The company said it continues to explore other options to satisfy its near-term and medium-term liquidity needs.