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Formus Broadband shuts down
Tuesday, March 13 2001
by Matthew Clark


Formus Broadband is shutting down due to insufficient funds and an inability to
reach an agreement with Broadnet, its last hope for salvation.

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.