MFN faces possible bankruptcy

High-speed communications provider Metromedia Fiber Network faces potential bankruptcy if it cannot restructure its debts. As of Feb. 28, MFN had about $3.3 billion of consolidated indebtedness and about $37.3 million in unrestricted cash and cash equivalents.

The company announced today that it deferred payments of about $30 million in interest on $975 million of convertible bonds owed to Verizon Communications, which was due March 15 to meet “near-term cash requirements.” If the two companies cannot come to an agreement on or before the 30-day grace period, MFN could default on these loans if it doesn’t make an interest payment.

“If we don’t get the deferral from Verizon, we can’t make the other interest payments, so we may have to file Chapter 11,” an MFN spokeswoman said. “Right now, we’re looking at all possibilities to restructuring the debt.”

In addition, the company is withdrawing its financial guidance through 2002. MFN did not provide revised guidance. The company noted it is looking to restructure its debts, which could reduce the value held by stockholders. MFN’s stock price fell 67% Monday to 9 cents per share.

MFN also announced that it is selling its Internet exchange facilities, called PAIX facilities, for about $50 million in cash and an equity interest in the buyer, who was not named. The sale should be completed by second quarter 2002. Proceeds from the sale will be used to reduce debts.

The company also stated it would look at “other opportunities in order to satisfy its near-term and medium-term liquidity needs” but did not specify what opportunities are being considered.