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To: larry pollock who wrote (3424)	6/15/2001 10:57:31 AM
From: larry pollock	Respond to of 3891

360networks says it won't make debt payment (UPDATE: Adds background and analyst quotes) By Scott Anderson TORONTO, June 15 (Reuters) - 36Onetworks Inc. (Toronto:TSX.TO - news), which had ambitious plans to ring the world with fibre during the telecom boom, said on Friday it will not make a $10.9 million interest payment due to its mounting debt. ADVERTISEMENT The company, which said it was delaying the payment to preserve cash while it reviewed its options, scaled back ambitious plans in mid-May to build a round-the-world fiber-optic undersea telecoms network and is seeking extra cash to meet a $300 million plus funding gap. It said it still had 30 days to avoid being in default on the 12.5 percent senior notes. The company also said it is now concentrating its efforts on other alternatives, including restructuring. 36Onetworks's announcement further reinforced troubles facing technology companies which have gone from boom to bust in a matter of months. Telecoms giant Nortel Networks Inc (NYSE:NT - news) warned of a huge second quarter loss on Friday, unsettling already shaky markets. Analysts had viewed 360network's ability to meet the debt payment as a key test of its viability. The company's shares, already reduced to the status of a penny stock, dropped to 44 Canadian cents in Toronto on Friday morning, down more than 30 percent from 65 Canadian cents late on Thursday. The stock has plunged to a tiny fraction of its 12-month high of C$35.90. 360networks, a spinoff from private construction firm Ledcor Industries and once named Worldwide Fiber, has struggled with a tightening capital market and reduced demand for fiber optic capacity since going public in April 2000. Even the company's IPO had to be scaled back 22 percent to $648 million and a related bond sale was cut back 20 percent to $800 million, despite the glamor of having former Microsoft Corp CFO Gregory Maffei as its chief executive. In May the company slashed planned capital spending by $1 billion and suspended dreams to build a transpacific line. It said the spending cuts would keep it from breaching debt covenants, but it would need to raise an additional $300 million in working capital. ``The significance of the announcement is that the company is now focusing its efforts on restructuring which is a tacit acknowledgment on the leverage of its balance sheet and the fact that it could not find, up until this point, additional parties to infuse the company with additional funding -- either debt or equity,'' said David Glaymon, an analyst at J.P Morgan in New York. French telecoms equipment maker Alcatel , is not expected to inject more cash into 360networks after writing off the remaining $500 million of a $700 million investment in the company two weeks ago. The investment was part of a $1.1 billion contract to build an undersea cable for 360networks linking North America to Japan. Other potential investors could come from the likes of Nortel, which is one of 360networks' major suppliers, and Ledcor, a private Canadian construction company that spun off 360networks as Worldwide Fiber, and remains the company's largest shareholder. ($1 equals $1.53 Canadian) Email this story - Most-emailed articles - Most-viewed articles