PSINet Faces Cash Crunch
By Ian Simpson
NEW YORK (Reuters) - Internet access provider PSINet Inc. (NasdaqNM:PSIX - news) said on Tuesday it was running out of cash and might reorganize under bankruptcy laws.
The company, which also provides Web hosting services, said it would not be able to file its 2000 financial report in the required period.
PSINet, based in Ashburn, Va., blamed ``rapidly changing circumstances'' for the delay. It said it believed more restructuring and impairment charges, possibly significant, would be posted for the fourth quarter.
The company said that as of March 30, it had cash, cash equivalents, short-term investments and marketable
securities of about $254 million. About $27 million of that amount secures obligations under letters of credit and other agreements.
PSINet, whose name appears on the stadium housing the Baltimore Ravens pro football team, said funds from the sale of assets would not be enough to meet its cash needs under plans the company was weighing.
``Even if one or more of such alternatives is successfully implemented by the company, there can be no assurance that the company will not run out of cash,'' the statement said.
``These efforts are likely to involve the company's reorganization under the federal bankruptcy code.''
PSINet said it expected to get a going concern qualification in its audit opinion from PricewaterhouseCoopers.
The company said it was likely that its stock would have no value, even with the reorganization and other efforts. It added that it may fail to meet capital requirements to continue being listed on the Nasdaq Stock Market.
PSINet's stock closed on Monday at $3/16, far below its 12-month high of $35. |
