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Metromedia Fiber Network Inc. (MFN) and most of its domestic subsidiaries filed for protection from creditors under Chapter 11 of the US Bankruptcy Code.
MFN, which builds and leases fibre-optic networks in metropolitan areas, said that it would continue operations without interruption.
"First and foremost, I want to assure our customers that our top-notch service levels will not be compromised by the reorganisation process," said John Gerdelman, president and chief executive officer of MFN in a statement. "Dedication to our customers and their businesses continues as a top priority."
Metromedia Fiber said its restructuring plan includes substantial debt reductions, the disposal of unproductive properties, workforce reductions, and the rejection of burdensome vendor contracts. The company also announced that UBS Warburg and Impala Partners are advising Metromedia Fiber in its restructuring.
"We believe that our core metro-fiber and data centre businesses are some of the best assets in the telecommunications industry. However, in growing the business we, along with others in the industry, out-paced the demand and, as a result, are overbuilt," said Gerdelman. "We are committed to taking the painful but necessary steps to ensure stability and long term success for our company."
The news is not unexpected, as earlier in May MFN defaulted on loan payments, having failed to negotiate a rescheduling of the debt. In April MFN announced that it did not have enough cash to see it through 2002.
Six months ago the company secured USD611 million from a consortium including Citicorp, existing investors and vendor financing, when the company said it would declare bankruptcy if funding could not be found.
MFN has an Irish data centre in CityWest, its largest in Europe, which cost USD65 million to build. The company also maintains a 75 kilometre fibre ring around Dublin, which cost around USD40 million to construct. Both were launched in October 2001. In total the company employs over 30 people in Ireland. No MFN representatives were available for comment.
The telecom carrier listed USD7 billion in assets and total liabilities of USD4.3 billion, in keeping with its third-quarter report, but the figures are likely to change. Last month, MFN said it will have to restate financial results for the first three quarters of last year, and that its auditor, KPMG LLP, deemed the company's internal systems and controls too flawed to review the results in keeping with normal accounting procedures.
MFN announced that it had been notified by The Nasdaq Stock Market that as a result of not meeting certain listing criteria, the company's securities would be delisted effective from 20 May.
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