RealTime IT News

Metromedia Fiber May Seek Bankruptcy

White Plains, N.Y.-based Metromedia Fiber Network Inc. said it would file for bankruptcy if it does not complete certain financing agreements, all of which rely on other commitments in a house-of-cards scenario.

In a statement, Metromedia said it has signed a secured note purchase agreement for a $150 million note facility led by Citicorp USA. That note comes with several conditions, including the closing of $235 million in vendor financing.

Metromedia, which provides optical IP Internet infrastructure within key metropolitan areas, also said it has received an extension until Sept. 12, of the commitment for the $235 million of vendor financing.

Metromedia said it cannot "provide any assurances that it will be able to consummate any of the financings it is pursuing," as each deal is dependent upon the consummation of the other financings. In the event that the company does not consummate the financings, it will need to seek protection under the bankruptcy laws, officials also said.

And if it does complete those pacts, the company said its stockholders' shares in the company would be "significantly diluted" because of the amount of equity it would issue to the parties providing financing.

Last Wednesday, Metromedia said it received a commitment letter for a $50 million convertible debt investment from an undisclosed investor. The day before that, it received approval from its debt holders to waive default on some of its debt.

The company also become the target of several shareholder suits, all of which claim that Metromedia misrepresented its state of affairs in public statements and/or SEC filings.

In August, Metromedia said its second-quarter losses more than doubled from the same period in 2000.