360networks says Maffei deal not part of overhaul
16:33 GMT-04:00 Thursday, June 28, 2001
Vancouver — Struggling fibre-optics firm 360networks Inc. has been spared from having to buy back a $77.5-million (U.S.) loan used to woo its high-profile chief executive, although a spokesman said Thursday the deal was not directly related to its current bid to reorganize.
Worldwide Fiber Holdings Ltd., a private firm owned by 360networks founders, has agreed to repurchase shares in the company that were bought by Greg Maffei with the loan, if he decides to sell them as allowed under a protective clause of his contract when he was hired in 1999.
As Microsoft Inc.'s former chief financial officer, Mr. Maffei's name gave 360networks an instant profile on Wall Street in the months leading up to the then little-known fiber optic company's initial public offering in April 2000.
Worldwide Fiber, which remains 360networks largest shareholder, issued a press release on Wednesday, the same day 360networks laid off 800 workers — about 44 per cent of its workforce — as it struggles to avoid collapsing under massive debt and slow demand for fibre-optic capacity.
"It [the loan deal] is not related to any restructuring. It was revised earlier this year," said 360networks spokeswoman Michelle Gagne.
A notice of the revision in the share agreement was also included in the company's first-quarter financial report, issued in April.
Under the original deal, Maffei was lent money by 360networks to purchase shares when he joined the firm in 1999. He had the right to make the company repurchase those shares if they fell below his purchase price of $1.25 each.
Shares in 360networks closed unchanged at 31 Canadian cents on the Toronto Stock Exchange on Thursday, 3 cents above their 52-week low and well off their $35.90 high.
360networks is a spinoff of private Canada construction company Ledcor Industries. Worldwide Fiber Holdings is owned by Ledcor's owners David Lede and Clifford Lede. David Lede is 360networks chairman.
360networks' problems have mounted in recent weeks as slumping demand has slashed its bid to ring the world in fibre-optic cable and it has struggled to raise $300-million (U.S.) in bridge financing.
Ms. Gagne said on Thursday there were no new developments to announce on its effort to raise the money, or pay a $10.9-million interest payment that was due on June 15, but does not fall into default until July 15.
The company has not specified how much money it expected to save from the layoffs, which Ms. Gagne said would be spread among all of the firm's departments. The cuts leave 360networks with about 1,000 employees.
Mr. Maffei said the layoffs were needed to allow the company to operate as "cost efficiently as possible."
Copyright © 2001 The Globe and Mail
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This really clarifies things - NOT!
Regards, Rob |
