TSIX must be getting ready to board up the windows. How can they survive? Alcatel can't afford to loan them the required capital. Interesting.
Fez
_____________________________
06 Jun 16:10
Following is a press release from Moody's Investors Service:
New York, June 06, 2001 -- Moody's Investors Service has lowered 360networks Inc.'s (TSIX) senior unsecured rating to Caa3 from B3, and its senior secured and senior implied ratings to Caa2 from B1. All ratings remain on review for
possible further downgrade.
This action which follows the company's recently announced revised guidance, reflects our concern that, absent additional funding, the company's liquidity position may be insufficient to provide sustained support for its operations.
On April 27, 2001, Moody's initiated a review of 360networks ratings for possible downgrade following its March 2001announcement of revised financial guidance for 2001. On May 15, 2001 360networks announced a further revision in its 2001 guidance.
In its latest announcement, 360networks has lowered its estimate of 2001 cash revenues to $1.2 -$1.4 billion from $2.4 -$2.6 billion (previously $3.1-$3.3 billion), and adjusted EBITDA to $750-$800 million from $1.8-$1.9 billion
(previously $2.5-$2.6 billion). Moody's analysis focuses on cash revenues and adjusted EBITDA since these metrics more accurately reflect actual cash receipts which the company has available to fund its operations. In addition
the company has reduced its estimate of 2001 capital expenditures to $2.2-$2.4 billion from $3.5-$4 billion. In connection with its revised business plan, 360networks is investigating solutions to delay the development of a
transpacific network. In addition, the current plan does not contemplate any further funding to the subsidiary purchasing fiber on C2C, a pan-Asian undersea network.
As of March 31, 2001, 360networks recorded liquid assets of $821 million, comprising cash and cash equivalents of $278 million and $543 million available under two credit facilities. This liquidity combined with expected adjusted
EBITDA of $583-$633 million for the balance of the year is available to support interest expense estimated at approximately $138 million (based on first quarter actual interest expense) plus capital expenditures estimated at
$1.2-$1.4 billion for the remainder of 2001.360networks has indicated that it will require additional working capital of approximately $300 million over the next four months, which in combination with its revised business plan, will
fund the company through the attainment of positive cash flow in 2002. However, there can be no assurance that 360networks will generate the level of EBITDA
indicated by its latest revised estimate or that it will be able to raise $300 million in additional funding. Alcatel, which announced a $700 million equity investment in 360networks last October, has not, to date, indicated a
willingness to provide additional support to 360networks. Moreover, we consider it unlikely that the company can access the public debt or equity markets, given present investor sentiment.
As of March 31, 2001, 360networks recorded fixed assets of $817 million plus network assets under construction of approximately $3 billion to support long term debt of approximately $2.5 billion. Moody's considers that the substantial level of assets under construction distracts from the debt protection measures available to cover debt-holder interests.
The broadband service provider sector is highly competitive, and a number of well-funded broadband fiber operators have recently completed their networks, and are able to competitively exploit their lead time to market ahead of 360networks.
Moody's review will focus on the company's ability to meet its recently revised financial guidance and assess the likelihood of success in securing the funding necessary to execute its business plan in 2001 and thereafter. We will
also examine the completion status of the company's network to assess the degree of protection afforded to debt-holders from assets under construction.
In addition our review will analyze the quality of the sales backlog, the means by which this backlog will be converted into sales, and the ability of 360networks sales force to replenish this backlog over time, in a highly
competitive environment.
360networks is based in Vancouver, Canada.
(END) DOW JONES NEWS 06-06-01
04:10 PM |
