360networks eyes life as North America-only system
(UPDATE: Figures in U.S. dollars unless noted)
By Allan Dowd
VANCOUVER, British Columbia, July 20 (Reuters) - Fiber optic telecoms network builder 360networks Inc. (Toronto:TSX.TO - news) told a court on Friday it has abandoned dreams of running a global system and is trying to survive as a North America-only operation.
The company, which has sought protection from creditors in Canada and the United States, said its restructuring plan will include liquidating its non-North American assets, such as its its recently completed transatlantic undersea cable.
With its original plan of ringing the world with cable dashed by a massive debt and slowing demand for telecommunications services, the company headed by Microsoft's former chief financial officer Greg Maffei has begun talks with potential buyers for the assets.
``There have been negotiations but there are no definite agreements,'' company spokeswoman Michelle Gagne told reporters outside the British Columbia Supreme Court -- which the company has asked to renew its protection order until the end of the year.
The hearing on Friday foreshadowed just how complicated it may be to untangle the finances of one of the first major fiber optic network firms to collapse.
The courtroom was packed not just with attorneys for 360networks's creditors, but with its customers and competitors who have found their own operations physically and financially linked to it through fiber-swap contracts.
``There is a whole web of connection contracts that support the web,'' 360networks attorney Michael Fitch told the court, acknowledging uncertainty about the firm's future had caused ``a high degree of anxiety'' for companies that have contracts to use its system."
360networks, which went public in April 2000 after being spun off by private Canadian construction firm Ledcor Industries, sought creditor protection in June. It said then the move would allow it to reorganize and concentrate on its core business.
Gagne said the company still believed it could reorganize as a viable and more tightly focused company, although she could offer no assurances that shareholders would be able to salvage any of their investments once the reorganization was completed.
The company has $1.2 billion in secured debt, $1.4 billion in unsecured bond debt and $250 million in unsecured North America trade debt.
360networks told the court on Friday it has prepared a budget that will allow it to operate for the rest of the year. The budget includes $55 million for capital costs to complete ongoing construction in North America.
The budget has been endorsed by the company's senior secured debt holders, but needs the court's approval.
The company's stock on the Toronto Exchange was up 3.5 Canadian cents on Friday to close at 35 Canadian cents. That's higher than the 31 Canadian cents it closed at the day before it sought protection, but a far cry from the record high of more than $24 reached last autumn.
Nasdaq suspended trading in 360networks just before it sought court protection and trading in the United States has not resumed pending discussions between the company and the exchange.
360networks' request for Chapter 11 bankruptcy protection in the United States is being heard by a federal bankruptcy court in New York City. A hearing in that case is not scheduled until next month.
($1 equals $1.54 Canadian)
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