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Metromedia signs rescue financing deal
Friday, September 21 2001
by Matthew Clark


Metromedia Fiber Network, an Internet infrastructure company with major
investments in Ireland, has signed a vendor financing agreement for USD231
million.



The company, which has reportedly been in some financial peril over the previous
months, said the deal is dependent on a number of conditions. First, the company
must close the previously announced USD150 million note facility led by Citicorp,
USA, for which the company has already signed an agreement, also subject to
certain conditions. Metromedia must also close a previously announced USD230
million deal of convertible notes financing.





The latest agreement expires on 28 September 2001 if the closing does not occur
on or prior to that date. 





The Citicorp deal, which was announced in August, was expected to have provided
USD62.5 million, if other sources agreed to provide USD87.5 million. Metromedia
did not reveal details of the additional source of the funding. 





If the complicated deal is not closed, Metromedia will seek protection under
bankruptcy laws, it said on Thursday. It also admitted that it "cannot provide
any assurances that it will be able to consummate any of the financing it is
pursuing." 





With each of the financing deals contingent upon the other, the company's hopes
of fully securing the badly need funds remain unsure. 





The company is expected to officially launch the new Internet services exchange
it is building in Citywest in Dublin later this month. But in early August
subcontractors at the facility temporarily ceased work due to a dispute over
payment at the site. 



The company has said the refinancing in the US will not affect the Internet
services exchange it is building in Dublin. Funding for the USD75 million centre
had already been secured before the US company began its refinancing, it said. In
the year the company has also spent USD40 million on a fibre ring in Dublin. 





In June 2001, Metromedia lowered its financial forecast for the year, citing
slowing sales to Internet customers. In August, the company also reported net
losses of USD205.2 million in the second quarter, almost double what it reported
in the same period last year.