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MFN unloads Irish assets
Wednesday, May 22 2002
by Matthew Clark
Metromedia Fiber Network has sold its operations in Ireland, including its USD65
million data centre, to an Australasian telecommunications group called Global
Voice.
The announcement comes just one day after MFN Ireland's parent company declared
bankruptcy in the US. However, because Metromedia's European operations trade
under a different subsidiary company, the sale of the Irish division is not
related to Monday's bankruptcy, a company spokesperson told ElectricNews.Net.
Noel Meaney, previously managing director of MFN Ireland, now chief executive
officer of Global Voice Networks, said that the deal had been completed weeks ago
and it was "unfortunate" that the announcement followed MFN news in the US.
In all, the deal will see MFN transfer ownership of its 75-kilometre fibre ring
in Dublin, as well as its 125,000 square foot data centre in Dublin, to Global
Voice. MFN Ireland spent over USD100 million constructing these two assets, both
of which were launched only seven months ago. The Australasian firm will also
take over MFN's international global access through the IDA's global crossing
network.
The companies declined to disclose the value of the deal, but they did say that
no jobs would be lost as a result and that MFN Ireland will re-brand as Global
Voice Networks.
Global Voice acted through a company called Regional Capital International
Limited, a major investor in the Melbourne-based firm, in making the deal. Until
now, Global Voice's main line of business has been the development and
manufacture of multi-protocol wireless technology, which is used to create
wireless networks over wide areas. The company has operated primarily in Asia up
to this point, but Meaney explained that the company will roll out its wireless
services in Ireland now that the deal was complete.
He went on to say that the company was considering replicating its Melbourne
manufacturing and distribution operation in Ireland, but such moves were still
under discussion. "I am delighted that the future of MFN's infrastructure in
Ireland has been secured by the agreement with Global Voice," said Meaney.
"Global Voice is a new breed of infrastructure company that will use its own
technology to deliver seamless broadband fibre and wireless infrastructure."
Earlier this week Metromedia Fiber Network Inc. (MFN) and most of its US
subsidiaries filed for protection from creditors under Chapter 11 of the US
Bankruptcy Code. As part of the company's restructuring plan, MFN said it would
dispose of its unproductive properties in order to cut costs. But it was thought
that these disposals would take place mainly in the US, since its European
subsidiary was not included in the bankruptcy declaration.
In fact, the bankruptcy news was 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.
The telecom carrier listed USD7 billion in assets and total liabilities of USD4.3
billion when it filed for bankruptcy, 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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