RealTime IT News

Metromedia Nabs $235 Million In Conditional Financing

Troubled long-haul optical fiber carrier Metromedia Fiber Network Inc. got a much-needed boost with its announced $235 million in vendor financing, officials said Thursday.

The carrier, which has seen its stock value plummet from a 52-week high of more than $40 per share to today's value of 69 cents, has been one of many high-tech stocks hit by investor defections the past 18 months.

It's critical Metromedia gets its financing in order to restructure its business model, and not just to fund current and future operations.

The Verizon Communications subsidiary is also the recipient of several class action lawsuits, filed this week in New York on behalf of shareholders who felt officials had made false and misleading statements about credit financing by CitiCorp USA .

The lawsuit maintains Metromedia had purposely mislead investors who purchased stocks valued at $19 per share back in January. By the time officials announced its $350 million credit financing was conditional later that year in July, the stock value had dropped to $1.95 per share.

Despite its legal and financial problems, many still think Metromedia's future is favorable. In addition to 3.6 million miles of fiber stretched over North America and Europe the carrier owns AboveNet, an international collocation company and PAIX.net, Inc., one of the world's largest Internet Exchange (IX) companies.

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

Metromedia had no comment on the status of the lawsuits.

The expiration date on the financing is Sept. 4 and comes with conditions like closing on its $150 million loan to Citicorp, made Aug. 20, and getting another $50 million in financing from outside sources. Metromedia has already gotten $180 million from its affiliates.

Officials were not available for comment about the announcement, but analysts expect the carrier to make further announcements now that it has secured additional financing to keep its operations running. According to reports, analysts expect Metromedia to slim down its operations to focus on its core business installing IP networks in metropolitan areas.