The hits just keep on coming at Metromedia Fiber Network. As if defaulting on bank loans, being delisted from the Nasdaq and filing for bankruptcy wasn't enough, now the embattled company is being formally investigated by the Securities and Exchange Commission.
The probe surrounds past accounting practices that led to the restatement of MFN's operating results for the first three quarters of 2001. The company delayed its 10-K filing with the SEC in April, citing a need to restate results for those three quarters. MFN said it is cooperating fully with the investigation, but had no further comment.
In May, MFN filed for bankruptcy protection from its creditors. "Our objective is to move through Chapter 11 expeditiously and have the 'new MFN' emerge with a sound capital structure and operational base, fully positioned to take advantage of market opportunities," MFN President and CEO John Gerdelman said at the time of the filing. MFN's stock was delisted from the NASDAQ National Market on May 20.
It has been a rocky road for MFN, and many investors have gotten nervous. In the spring, Salomon Smith Barney Inc., like Citicorp USA, resigned as the company's financial adviser and UBS Warburg replaced it. Kronish Lieb Weiner & Hellman LLP was hired as the company's legal adviser. In March, Verizon and its Internet transport affiliate, Genuity Inc., terminated contracts with MFN.
The folks at the SEC have been busy little beavers ever since the Enron scandal began to unfold. Since then, the commission has launched several investigations, including WorldCom Inc., Adelphia Communications Corp., Qwest Communications International Inc., Network Associates and Williams Communications Inc.