RealTime IT News

PSINet Reduces Founder's Role

Facing an uncertain future that could involve a bankruptcy proceeding, PSINet Inc., is shaking up its management team, including appointing Harry G. Hobbs to replace William L. Schrader as chief executive officer of the Ashburn, Va.-based company. Hobbs will also take a seat on the board of directors.

In addition, Schrader has been replaced as chairman of the board by Ian Sharp. Schrader, the troubled company's founder, will remain as a member of the board and serve the company in an advisory capacity.

PSINet also announced that its board of directors has formed a Restructuring Committee in order to facilitate the management of the company's restructuring efforts. The Committee will be chaired by Ralph J. Swett and will include Hobbs and Dr. William H. Baumer.

Lawrence E. Hyatt, PSINet's executive vice president and chief financial officer, has assumed the additional responsibility of chief restructuring officer, working closely with bondholders and other creditors in addressing options to rationalize the balance sheet.

"Bill Schrader is one of the true pioneers of the commercial Internet. His founding vision led PSINet to assemble valuable assets, including one of the largest and most advanced global networks and 16 state-of-the-art hosting centers," Sharp said. "Given the changed circumstances within the marketplace and the company, we need to focus the company's efforts on preserving and enhancing this value."

In recent weeks, PSINet announced its cash, cash equivalents, short-term investments and marketable securities are not expected to be sufficient to meet the company's anticipated cash needs. The possible sale of all or a portion of the company is being considered.

Hobbs has served PSINet in various capacities since 1997, most recently as president and chief operating officer, and has played a key role in efforts to streamline the company's operations. In his expanded position, Hobbs will focus primarily on developing and executing a business plan aimed at moving PSINet through its restructuring.

PSINet provides Internet and IT solutions, global e-commerce infrastructure, end-to-end IT solutions and a full suite of retail and wholesale Internet services through wholly-owned PSINet subsidiaries. Services are provided on PSINet-owned and operated fiber, web hosting and switching facilities, currently providing direct access in more than 900 metropolitan areas in 27 countries on five continents.