Verizon, Genuity cancel contracts with Metromedia

Verizon Global Networks and Genuity have canceled fiber leases with struggling fiber fiber wholesaler Metromedia Fiber Network.

The contract with Verizon called for Metromedia to receive $350 million, $235 million of which has already been paid. The Genuity deal was worth $200 million, with $140 million paid. The next payment for both contracts was due in the fourth quarter.

According to a Metromedia spokesman, the cancellations came in response to the company’s March 29 default on $241 million in 14% notes, part of a financing package announced last October.

“Under our agreements, should Metromedia go into default on its loans, they had the right to cancel the contracts,” the spokesman said.

Metromedia is now in discussions to restructure this debt, of which Verizon is a significant holder. Despite the contract cancellation, Verizon is in negations with Metromedia, the spokesman said.