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Metromedia Gets Extension of Financing Commitment

Still seeking to stave off bankruptcy, White Plains, N.Y.-based Metromedia Fiber Network Inc. Thursday finagled an extension of its commitment letter to put together $235 million in vendor financing by Sept. 12.

Metromedia agreed to put together the financing as a condition of a Sept. 7 deal in which it signed a secured note purchase agreement for a $150 million note facility led by Citicorp USA. At the time of the deal, Metromedia said it would file for bankruptcy if it does not complete its financing agreements.

However, the extension only gives Metromedia four days -- until Sept. 17 -- to fulfill its commitment.

Last week, when the deal was first reached, Metromedia, which provides optical IP Internet infrastructure within key metropolitan areas, 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.

Completion of those pacts would cause stockholders' shares to be "significantly diluted" because of the amount of the amount of equity Metromedia would issue to the parties to provide financing, the company said at the time.

And the company has already become the target of several shareholder suits, all of which claim that Metromedia misrepresented its state of affairs in public statements and/or Securities and Exchange Commission filings.

The lawsuits maintain Metromedia purposely mislead investors who purchased stocks valued at $19 per share back in January. By July, when officials announced that its $350 million credit financing -- also from Citicorp USA -- was conditional, the stock value had dropped to $1.95 per share.

Metromedia is also fighting off a lawsuit by Massachusetts-based StorageNetworks, which claims Metromedia failed to provide the bandwidth it contracted with the carrier to provide.