360networks abandons global fibre-optic
ambition
POSTED AT 7:53 PM EDT Friday, July 20
By PETER KENNEDY
From Saturday's Globe and Mail
Vancouver — 360networks Inc. has abandoned
plans to be a global player in the fibre-optics
business, saying it will sell off its European
operations and focus on North America as it
attempts to restructure its $2.8-billion (U.S.) debt.
The Vancouver-based company outlined its new
strategy in submissions to the British Columbia
Supreme Court which Friday gave it until Dec. 31 to
file a plan for restructuring its massive debt.
Headed by former Microsoft Corp. chief financial
officer Greg Maffei, 360networks set out last year to
build a global fibre-optic network designed to
transmit voice and data at lightning speed.
But massive oversupply in the fibre-optic sector left
the company unable to fund its $7-billion network
and it was forced to seek court protection from creditors in both Canada and the United
States last month.
360networks sought refuge with $1.2-billion in secured debt as well as about $1.4-billion
of unsecured bond debt. It also owes about $60-million to trade creditors in Canada.
Having already laid off about 45 per cent of its global work force, 360networks hopes to
remain viable by beginning an orderly liquidation of its European operations, company
lawyer Michael Fitch said.
In court documents, 360networks said it has completed approximately half of a European
network that was expected to stretch for 20,200 kilometres. Of that amount, the company
said about 10,900 kilometres was in service.
The company also said in court filings that it was in the process of bringing metropolitan
networks on stream in London, Amsterdam, Frankfurt and Paris and had plans to add an
additional 12 networks in major cities through Europe.
However, European creditor protection laws would make it difficult for the company to
restructure its operations there, Mr. Fitch told the court.
"Our strategy is to retrench in North America," he said, adding that the North American
networks are in a much more advanced stage of development.
Court filings indicate the company has completed about 36,200 kilometres of a North
American network expected to span 43,000 kilometres when it is finished. Of that
amount, 22,600 kilometres has been activated.
Meanwhile, with about $100-million cash on hand, Mr. Fitch said the company believes it
has sufficient funds to run its operations until the end of this year. He also said there is no
opposition from creditors to "the thrust of what we are trying to do."
Friday's court hearing was the first opportunity for lawyers representing creditors such as
Shaw Communications Inc., Telus Corp., GT Group Telecom Inc. and Canadian Pacific
Railway Co. to express any doubts about 360networks' immediate plans.
A number of them said that because their arrangements with 360networks are interrelated
and involve a number of parties, they wanted to given sufficient notice if the company
elects to cancel any agreements with them.
B.C. Supreme Court Judge David Tysoe responded by ordering the company to give at
least 30 days notice when electing to cancel its Canadian contracts, rather than the 15
days it had been asking for.
The company will have to seek court permission before cancelling any contracts that
come under the jurisdiction of U.S. Bankruptcy Courts.
Lawyers acting for company creditors said it is essential that they receive sufficient notice
of any intent to cancel because some agreements involve cross-border assets. |
