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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: Raymond Duray who wrote (17420)	4/2/2002 4:32:32 PM
From: elmatador	Read Replies (1) of 74559

Next: Flag Telecom misses payments, gets auditor warning By Reuters staff 02 April 2002 Flag may fold, despite struggle to restructure. Flag Telecom Holdings Ltd. said Monday it decided to skip interest payments due March 30 on two note issues, leading its auditor to warn it has "substantial doubt" whether the telecommunications equipment operator can stay in business. Bermuda-based Flag disclosed its plan to skip roughly US$33 million of payments on its US$300 million plus 300 million euros (US$264 million) of 11.625 percent notes in its annual report, filed Monday with the U.S. Securities and Exchange Commission. The company said it has a 30-day grace period to make the interest payments, but that, if it fails, holders of 25 percent or more of either series of notes can demand that Flag repay all of the principal. Flag said it now lacks sufficient liquidity to make such payments. Flag's auditor, Andersen, said the missed interest payments raise "substantial doubt about the Company's ability to continue as a going concern." The company is one of many telecoms to suffer as demand for its services waned. Flag said it remains in talks with lending banks and equipment suppliers to restructure its debt and last month hired Credit Suisse First Boston and the Blackstone Group to assist. Flag shares closed Monday on Nasdaq at 19 cents, down 18 cents from Thursday, and down 96 percent in the last year.

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