FLAG debacle: Alcatel has an exposure of €100m.
Flag lags on debts, shares down 40%
Alcatel exposed as undersea carrier nears default By Chris Nuttall FT Investor, 12:44 BST Apr 3, 2002
LONDON (FT Investor) - Shares in Flag Telecom, the undersea telecom network provider, were marked nearly 40 per cent lower in London on Wednesday as the likelihood of a restructuring of the indebted carrier grew.
Flag [FTL, News, Chart, Research] did not make required interest payments on March 30 on $300m and €300m 11.6 per cent senior notes. It has a 30-day grace period before defaulting and the full amounts becoming payable.
Flag, in a filing of its annual report to the US Securities and Exchange Commission on Monday, said it did not have sufficient liquidity to pay in full and would have to file for bankruptcy protection if it could not negotiate a restructuring of the notes.
Arthur Andersen, its auditor, said there was substantial doubt about Flag's ability to continue as a going concern.
Alcatel debt
Bermuda-registered Flag [FTHL, News, Chart, Research] saw its shares fall 21 per cent to 15 cents on the Nasdaq, its main listing, on Tuesday after a 49 per cent fall to 19 cents on Monday.
They shares were marked down 38 per cent at 14p in London on Wednesday morning. They topped £25 when first listed in 2000.
Reuters reported on Wednesday that Alcatel [ALA, News, Chart, Research] [013000, News, Chart, Research], which has supplied equipment and built undersea fibre-optic networks in the Atlantic and Pacific for Flag, had an exposure of €100m to the company.
In February, Flag reported a 150 per cent increase in net losses in 2001 and said it had liquidity problems. See story
Flag has undersea cables linking Europe, North Africa, the Middle East, the US and Asia as well as a terrestrial network in Europe.
Major shareholders in Flag include Verizon Communications [VZ, News, Chart, Research] and Tyco International [TYC, News, Chart, Research]. |
