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To: Stcgg who wrote (1551)	7/26/2001 9:22:43 PM
From: Softechie	Respond to of 2155

Metromedia struggles to close credit facility by Leon Lazaroff Posted 07:00 PM EST, Jul-24-2001 Metromedia Fiber Network Inc. faces the very real possibility that it will not obtain a $350 million credit facility that the company said would fully fund its business plan, said sources close to the deal. Without the loan, though, Metromedia Fiber, which installs and leases fiber-optic lines to city-based businesses, would face a short-term funding squeeze. That could force the White Plains, N.Y.-based company to turn for help to its majority owner, billionaire John Kluge, head of the privately-owned conglomerate Metromedia Co. Metromedia Fiber and its financial adviser, Salomon Smith Barney Inc., have until July 31 before a commitment from Citicorp USA to contribute $62.5 million toward the credit facility is due to expire. Citicorp, like Salomon, is a subsidiary of Citigroup Inc. In the spring, Citicorp USA agreed to fund the facility only if Metromedia Fiber could raise the remaining $287.5 million. Citicorp has already extended its funding deadline twice to Metromedia, May 15 and June 30. Sources said J.P. Morgan had considered participating in the financing package but withdrew its support. Investors have viewed the credit facility as integral to bridging the company's current operations to midway through the fourth quarter when Verizon Communications is scheduled to make a $167 million payment to Metromedia Fiber for a series of fiber-optic lines. For now, Metromedia must finance $1.6 billion in long-term debt and $1 billion in convertible subordinated notes which represents Verizon's investment in Metromedia, a stake roughly equal to 18% of the company's stock. Prompted by the company's decreased revenue forecast for 2001, Moody's Investors Services earlier this month placed Metromedia Fiber debt on review for possible downgrade. Tightly controlled by Kluge, one of the world's richest men, Metromedia Fiber has won an unusual distinction among telecom analysts as one of the hardest companies to follow. Unlike nearly all publicly traded companies, Metromedia rarely holds quarterly conference calls, and even then, its executives don't take questions from analysts or reporters. Though Metromedia Fiber is based in Westchester County, N.Y., the company's investor relations' matters are handled by a Manhattan-based team that also fields financial inquiries about Kluge's other publicly owned entities. "While this is publicly traded company, it is privately controlled, and it often acts that way," one observer said. Metromedia Fiber would not comment on negotiations surrounding the credit facility. If market sentiment is any indication, investors appear doubtful that Metromedia will obtain the credit facility. In the three weeks since Citicorp extended its funding commitment for the third time, Metromedia Fiber's stock has fallen 53%. Shares in the company, which peaked at $50.56 last year, closed Tuesday at 96 cents a share. "Clearly the concern is that they won't be able to get a deal done," said Jim Friedland, telecom analyst at Robertson Stephens Inc. "If they can't get the deal done, they may not be able to fund themselves for the remainder of the year." Metromedia Fiber's financing troubles reflect the general slowdown in broadband demand that has resonated throughout the industry. Over the past four years, Metromedia among a few others, has done the broadband industry's dirty work, tearing up streets and laying fiber-optic lines that connect buildings and enterprises to long-distance fiber-optic cables owned and leased by companies such as Global Crossing Ltd., Level3 Communications and WorldCom Inc. But in the past year, as telecommunications companies elected to scale back their expansion plans and companies offering high-speed Internet access, Web infrastructure services and Web hosting went bankrupt or were folded into other operations, Metromedia Fiber's revenue growth has slowed. Investors wary of further exposure to telecom companies have further choked efforts to obtain financing. Metromedia Fiber operates fiber-optic networks in 27 of the nation's largest cities; by 2004, the company hopes to build another 30 metropolitan networks.