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Formus Broadband made an announcement informing all of its employees they were being terminated because the company no longer has sufficient funds to remain in business, according to a source close to the company.
The company employed 71 people in Ireland, who have all been released from their positions effective immediately. Formus executives were not available to comment or to say whether staff would be paid wages for the current month.
The Formus closure follows a similar collapse in January of the Eircom backed e-business Ebeon. Ebeon closed abruptly with a loss of more 197 jobs, and although its staff were paid final wages, expenses are still understood to be unpaid.
Last week ElectricNews.Net reported that Formus was in negotiation with Broadnet regarding a possible bailout. However the company was unable to reach a deal and will be closing up shop in Ireland permanently.
Formus' debts had totalled more than USD2.5 million and its running costs are more than USD600,000 monthly.
Last week the company released a letter to its customers, numbering more than 3 dozen, saying they were in no immediate danger of being cut off and the company wants "to allay any concerns you may have over the coming weeks with regard to the future of Formus Broadband Communications."
The letter also said "It is true to say that Formus is currently reviewing our business due to adverse market conditions in the telecommunications sector."
The company was incorporated in October 1996 and as of the end of 1999 had generated revenues of just USD2.3 million and losses of around USD60 million. In its filing with the US Securities and Exchange Commission in May of 2000 the company said it expected to incur losses "for the foreseeable future." The company has raised some USD450 million in the past three and a half years from private sources.
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