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Future looks bleak at Metromedia
Monday, April 22 2002
by Matthew Clark


Communications and media firm Metromedia International Group, the owner of
Metromedia Fiber Network, said it does not have enough cash to see it through
2002. 



After releasing its results on Monday, the struggling company, which also owns
mobile communications and cable TV networks as well as radio stations, admitted
that its accountants have expressed "substantial doubt about the company's
ability to continue as a going concern."



If the company can not secure funding or get cash from the sale of assets, it may
seek bankruptcy protection. Metromedia International also said it has retained
the services of an advisor to manage the sale of Snapper, its garden equipment
business. The company has also held negotiations with representatives of holders
of its senior discount notes regarding possible restructuring of the obligations
under those notes. 



But such moves may not be enough to save the struggling firm. The company said in
a statement on Monday that it "cannot make any assurance that it will be
successful in raising additional cash through asset sales or through cash
disbursements from its ventures, nor can it make any assurance regarding the
successful restructuring of its indebtedness."



For the full year, Metromedia said its net loss widened to USD263.5 million or
USD2.80 a share, from USD39.3 million, or USD0.42 a share, a year earlier.
Revenue fell to USD294.7 million from USD303.9 million. 



On Friday, Nasdaq halted trading of Metromedia Fiber Network (MFN) Inc.'s shares
after the telecommunications company said it would restate results for the first
three quarters of 2001. That followed an announcement on Wednesday which said
that its auditor, KPMG, found MFN's internal systems and controls so flawed that
results could not be reviewed under normal accounting procedures.



Metromedia has already defaulted on debts once in the past 12 months and it is
estimated that the company currently has about USD3.3 billion in debt. 



 

The consequences of a Metromedia collapse would certainly be felt in Ireland. In
Dublin the company runs a data centre in CityWest, its largest in Europe, that
cost USD65 million to build. The company also maintains a 75km fibre ring around
Dublin which cost around USD40 million to construct. Both were launched in
October 2001.



In total the company employs over 30 in Ireland and spokespeople for the company
could not say what effect the bankruptcy would have on its Irish operations. 



Just six months ago the company secured USD611 million from a consortium
including Citycorp, existing investors and vendor financing.  At that time, as
with Monday's announcement, the company said it would declare bankruptcy if
funding could not be found.