360Networks misses interest payments; aborts NetRail deal
360networks won't make that $10.9 million interest payment due today and could be in default if it doesn't come up with the funds in 30 days. The company also won't acquire NetRail as planned.
Also, Impsat Fiber Networks Inc. in Buenos Aires announced today it terminated certain contracts with some of 360networks' subsidiaries. Impsat on Friday said it was confident it could collect the $70 million 360networks owed for Indefeasible Rights of Use on Impsat's fiber network.
360networks says it will not make the interest payment on its 12.5 percent senior notes so it can preserve cash "as it reviews its options," it says. Discussions with shareholders and others, announced last month, are not done yet, the company reports, leading it to consider alternatives, including restructuring. The company retained the asset management firm Lazard Freres to help.
The company also says its all-stock acquisition of IP service provider NetRail Inc. has been called off. 360networks announced on Feb. 20 it would acquire the Atlanta company, whose leased backbone network spans 20,000 miles with more than 50 POPs nationwide. The merger was to accelerate 360networks' entry into the IP services market.
The aborted sale also is part of 360networks' efforts to preserve cash, spokeswoman Michelle Gagne says. The purchase price was undisclosed and Gagne would not speculate as to whether the company would pursue the acquisition if its situation improved.
NetRail did not return calls by CEDaily's deadline.
Finally, Impsat said today it terminated certain contracts it signed with 360networks' subsidiaries regarding "provision of IRUs over dark and lit fiber capacity, as well as maintenances services, in Argentina and Brazil," it says. It did not give a reason.
The company affirmed on Friday it was confident it would receive this month one-third of the $70 million 360networks owes, with the balance paid in September.
Impsat spokeswoman Kathy Purcell had no additional information and could not say if the terminated contracts were connected with 360networks' financial problems. Argentina is celebrating a national holiday and representatives could not be reached.
Gagne would not comment on Impsat, except to say 360networks was in discussions with the company. Regarding subsidiaries, "I can only assume they are referring to 360americas," a wholly owned subsidiary in Latin America and 360's only one there, she says.