Metromedia Fibre Networks, which opened a $75 million (€85 million) internet data centre in Dublin in September, has said it may have to declare bankruptcy if it cannot restructure its $3.3 million debts.
It also scrapped its financial guidance to the end of 2002 five months after it received $611 million in financing which investors hoped would stave off a bankruptcy. Metromedia, which provides telecoms and internet infrastructure to firms in the US, Europe and Asia, said it had just $37.3 million in cash at the end of February. To preserve money, the firm deferred payment of about $30 million of interest due on $975 million of convertible notes issued to one of its shareholders, the US telecoms firm Verizon.
Metromedia said it was in talks with Verizon, but it may default on its debt if it failed to reach an agreement or make an interest payment within a 30-day grace period. It indicated it would look for other options to satisfy its near-term and medium-term cash needs.
Verizon owns a 6.6 per cent stake in the firm and its total financial exposure is about $230 million. It declined to comment on its discussions with Metromedia. Mr Noel Meaney, general manager of Metromedia Ireland, said yesterday it was "business as usual" for the firm's European operations and a bankruptcy filing was not a foregone conclusion.
Rating agency Moody's Investors Service cut its long-term rating on $1.8 billion of Metromedia's debt securities, saying a restructuring or possible bankruptcy "will result in poor recovery prospects to \ debt-holders".
Metromedia, which employs 40 people in Dublin, has scaled back its operations here since last autumn when it first got into financial difficulties. It also lost a contract to support the Microsoft.Net project to distribute software over the internet from Dublin.
