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.
