360networks Files for Bankruptcy
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360networks said it and several of its subsidiaries have filed for bankruptcy in the U.S. and Canada.
"We are taking these steps to restructure our business and financial position in a difficult telecommunications environment," said Greg Maffei, president and chief executive officer of 360networks, in a late-Thursday statement. "While very disappointing, we believe today's filings provide us the best opportunity to reorganize and operate our core business."
The main company filed for protection in the Supreme Court of British Columbia, while 360's principal 360networks (USA) subsidiary and 22 of its affiliates concurrently filed for protection under Chapter 11 in the U.S. Bankruptcy Court for the Southern District of New York.
Where necessary, appropriate action is being taken in other jurisdictions to protect the company's assets, 360networks said in the statement.
The company and the subsidiaries covered by the filings currently have approximately $155 million of unrestricted cash, cash equivalents, short-term investments and marketable securities on hand. 360networks expects to use these funds to maintain service to existing customers in Canada and the U.S., and to complete key segments of its North American network.
The Thursday filings do not include the company's 360americas subsidiaries, which were acquired in connection with the purchase of GlobeNet Communications Group Limited. In addition, 360networks intends to initiate insolvency proceedings for certain of its European subsidiaries.
The company believes it will be able to complete its North American network using its cash and current backlog of contracted revenues. Further growth will depend on its ability to attract additional financing or strategic investment into the reorganized company, however. Subject to certain conditions, the company's senior secured lenders have agreed to subordinate their liens to up to $100 million of debtor-in-possessions (DIP) financing, and the company has received a firm proposal for such financing.
360networks also intends to consider additional proposals to enable it to obtain the best available terms and is examining other strategic alternatives, including asset sales, officials said.
The company also saw a major shakeup on its board, as it announced the resignation of seven board members: Kevin Compton, Glenn Creamer, John Malone, Claude Mongeau, Christian Reinaudo, John Stanton and Jim Voelker. These resignations took place prior to Thursday's filings, officials said.
360networks offers optical network services to telecommunications and data-centric organizations. The company's fiber optic network connects more than 50 major cities in North America, Europe and South America with terrestrial segments and undersea cables. As of March 31, 2001, 360networks had total assets of $6.3 billion and total liabilities of $3.6 billion. Currently, the company has $1.2 billion of senior secured bank debt and $1.45 billion, represented by unsecured Senior Notes. The company's cash revenue was $644 million in 2000 and $274 million in the first quarter of 2001.
Trading in 360networks shares were halted in the after-hours session late Thursday. But the company's stock had closed the regular session up a penny at $0.21. The company's 52-week spread has seen 360networks' shares trade as high as $24.19 and as low as $0.17.
On Wednesday, the Vancouver-based 360networks said it would reduce its global work force by about 800 positions, as part of its efforts to reduce operating expenses and conserve capital. The workforce reduction includes a range of positions in North America, Europe, South America and Asia. The company said will continue to employ about 1,000 people globally.
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