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Technology Stocks : METROMEDIA FIBER NETWORK (MFNX) -- Ignore unavailable to you. Want to Upgrade?

To: MeDroogies who wrote (375)	7/2/1999 1:06:00 PM
From: MangoBoy	Respond to of 1983

[S&P affirms Metromedia Fiber Network] NEW YORK, July 2 - Standard & Poor's today affirmed its single-'B' corporate credit and senior unsecured debt ratings on Metromedia Fiber Network Inc. The outlook is positive. The affirmation follows the company's June 23, 1999, announcement of a merger agreement with AboveNet Communications Inc. The acquisition is strategically complementary: Metromedia is a high-density fiber optic carriers' carrier focusing on local network facilities; AboveNet markets to Internet service providers (ISPs) as an ISPs' ISP, providing managed co-location and Internet connectivity solutions. In addition, AboveNet is virtually debt free. The merger is being funded with $1.37 billion in stock, and is expected to close in the third quarter of 1999. The ratings on Metromedia reflect the business risks faced by this emerging local facilities telecommunications company as it expands from its core New York City metropolitan area to become a national and international company. Risk is tempered somewhat by the current strong demand for quality local fiber optic networks, by the company's excellent service reputation, and by the prefunding of the company's current business plan. Metromedia designs and builds high-capacity fiber optic networks for large telecommunications carriers and for corporate and government customers in tier one cities, adjacent suburban edge cities, and connecting interurban corridors. Metromedia currently operates an all fiber optic network in the New York City metropolitan area as well as in Philadelphia and Washington D.C. Metromedia's network and service philosophy has served as a template for expansion to other tier one cities in the U.S. and in its planned expansion into the U.K. and German markets. Significant debt funding of Metromedia's network expansion contributes to generally weak financial ratios over the intermediate term. However, the company's recent debt issue has prefunded the company's business plan. Metromedia gains an element of flexibility by selling long-term dark fiber contracts. Customers' make up-front cash payments for a percentage of the contract, and these deferred revenue deposits spread the construction financing risk between the customers and Metromedia. OUTLOOK: POSITIVE Metromedia derives a degree of financial flexibility by prefunding its capital needs and by the interest escrow on its notes. If the company can nationally replicate the success it has had in the New York metropolitan area, it is likely to experience improved and sustained growth in revenues and cash flow over the intermediate term, Standard & Poor's said.