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To: larry pollock who wrote (3501)	6/29/2001 1:38:01 PM
From: larry pollock	Read Replies (1) \| Respond to of 3891

360networks Seeks Court Protection June 29, 2001 From Creditors While Building System By Mark Heinzl Staff Reporter of The Wall Street Journal Telecommunications carrier 360networks Inc. filed for court protection from creditors in an attempt to preserve its assets while continuing to build its network. Swamped with debt, the Vancouver, British Columbia, company filed for protection under the Companies' Creditors Arrangement Act in the Supreme Court of British Columbia, while its main U.S. subsidiary 360networks (USA) Inc. filed under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York. The company said it has about $155 million of cash and short-term investments, and expects to use the funds to maintain service to existing customers in Canada and the U.S. and complete certain segments of its North American network. The company has hired Lazard Freres to help restructure 360networks' debt obligations, and the company is considering asset sales, it said. "While very disappointing, we believe [the] filings provide us the best opportunity to reorganize and operate our core business," said 360networks President and Chief Executive Officer Greg Maffei, who left his post as chief financial officer with Microsoft Corp. shortly before joining 360networks early last year. 360networks said it will begin insolvency proceedings for certain of its European subsidiaries. 360networks joins a crowd of failed upstart telecommunications carriers that spent billions of investors' dollars to build high-capacity networks on the promise of exploding network data traffic. The traffic has fallen short of expectations, however, amid heavy competition with established carriers, the slow deployment of broadband connections and the lack of revenue-generating network applications. 360networks was behind other upstart global carriers in building its global fiber-optic network, and has succumbed to a crushing debt load amid heavy spending and scant revenue. Even as the telecom industry slowed sharply earlier this year, 360networks officials remained upbeat about the company's prospects and continued the network expansion. In March, the company said it was "fully funded to complete our current business plan," and talked of "strong demand" for its network services. The company has completed only portions of its network, however, which had been planned to span about 89,000 miles and link more than 100 major cities around the world. The company has secured only a handful of substantial customers, and last month slashed revenue and earnings projections for the current year. 360networks said earlier this month it wouldn't make a scheduled $10.9 million interest payment on its 12.5% senior notes, and earlier this week announced the layoff of 800 employees, reducing the total to about 1,000. The company has about $2.6 billion of debt, made up of unsecured publicly held debt and secured bank financing. The publicly traded debt has been valued at just pennies on the dollar recently, a sign that investors don't expect 360networks' assets are likely to generate a significant return for unsecured creditors under a reorganization. Alcatel SA, the big Paris-based telecom-equipment provider, has also been hurt by 360networks. Alcatel provided $700 million to 360networks last year in return for preferred shares and equipment purchases for a Pacific submarine link 360networks was planning to build. 360networks earlier this year called off plans for the Pacific link and Alcatel wrote down its investment in 360networks. 360networks said several of its directors resigned, including communications executive John Malone. Write to Mark Heinzl at mark.heinzl@wsj.com