PSINet Considers Offer for Latin American Operations
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An investment group that includes senior members of PSINet's Latin American management team has signed a letter of intent to purchase PSINet's Latin American operations and facilities in Argentina, Brazil, Mexico and Uruguay. The terms of the potential deal were not disclosed.
The bankrupt backbone Internet service provider is also considering strategic alternatives for its operations in Chile and is in discussions with a potential purchaser group. PSINet's operating subsidiaries in Latin America are not part of the Ashburn, Va.-based company's June 1 Chapter 11 bankruptcy filing, which included 24 PSINet operating subsidiaries in the U.S.
In its bankruptcy petition, PSINet claimed total liabilities of $4.3 billion and total assets of $2.2 billion. Of the $4.3 billion in liabilities, $2.9 billion is bond debt. The companies involved in the filings had approximately $300 million of unrestricted cash, cash equivalents, short-term investments and marketable securities on hand. The company believes this cash balance will provide sufficient financial resources to fully fund operations during the anticipated restructuring period.
Four Canadian subsidiaries also have filed for protection under the companies' Creditors Arrangement Act statutes, enacted in Canada in 1985, in the Ontario Superior Court of Justice.
The company has also announced that it has signed a letter of intent with Telus Corp., one of Canada's largest telecommunications companies, to sell PSINet's Canadian operations and facilities. The proposed purchase is subject to a number of conditions, including regulatory approval and approval under the bankruptcy proceedings. In Canada, PSINet serves most major markets and provides Internet access, Web hosting, e-security and e-commerce application services to the business and ISP markets. Financial terms of the Telus deal were not disclosed.
Additionally, the PSINet said it has entered into a definitive stock purchase agreement for the sale of its operations in Panama to REE Panama, S.A., and has closed on the sale of substantially all of its business operations in Puerto Rico. Terms of these transactions also were not disclosed.
PSINet's European and Asian subsidiaries, which were not covered in the filings, are expected to continue to operate independently, as before the filings. The company believes that these subsidiaries have sufficient resources to meet their obligations through the restructuring process.
PSINet's Metamor and its subsidiaries, which also were not included in the filings, continues to operate as before. While Metamor is currently in compliance with its financial obligations, including its convertible subordinated notes, the company is in discussions with the Metamor note holders.