Late last night, 360networks announced that the company and several of its operating subsidiaries have filed for protection under the Companies' Creditors Arrangement Act (CCAA) in the Supreme Court of British Columbia. The company's principal U.S. subsidiary, 360networks (USA) inc. and 22 of its affiliates concurrently filed for protection under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York. Where necessary, appropriate action is being taken in other jurisdictions to protect the company's assets.
The company and the subsidiaries covered by the filings currently have approximately $155 million of unrestricted cash, cash equivalents, short-term investments and marketable securities on hand. 360networks expects to use these funds to maintain service to existing customers in Canada and the United States, and to complete key segments of its North American network.
The filings do not include the company's 360americas subsidiaries, which were acquired in connection with the purchase of GlobeNet Communications Group Limited. In addition, 360networks intends to initiate insolvency proceedings for certain of its European subsidiaries.
360networks believes it will be able to complete its North American network using its cash and current backlog of contracted revenues. Further growth will depend on its ability to attract additional financing or strategic investment into the reorganized company. Subject to certain conditions, the company's senior secured lenders have agreed to subordinate their liens to up to $100 million of debtor-in-possessions (DIP) financing, and the company has received a firm proposal for such financing. 360networks also intends to consider additional proposals to enable it to obtain the best available terms and is examining other strategic alternatives, including asset sales.
According to Greg Maffei, president and chief executive officer of 360networks, the company filed the reorganization to try and restructure the business and cited the looming �difficult telecommunications environment." He continued, "While very disappointing, we believe today's filings provide us the best opportunity to reorganize and operate our core business."
Lazard Freres is assisting 360networks to develop and evaluate options, including restructuring its debt obligations. PricewaterhouseCoopers Inc. has been appointed by the court in Canada as Monitor of the Canadian proceeding.
The company also announced the resignation of seven board members: Kevin Compton, Glenn Creamer, John Malone, Claude Mongeau, Christian Reinaudo, John Stanton and Jim Voelker. These resignations took place prior to the bankruptcy filings.
About 360networks:
360networks (NASDAQ: TSIX and TSE: TSX) offers optical network services to telecommunications and data-centric organizations. The company's fiber optic network connects more than 50 major cities in North America, Europe and South America with terrestrial segments and undersea cables. As of March 31, 2001, 360networks had total assets of $6.3 billion and total liabilities of $3.6 billion. Currently, the company has $1.2 billion of senior secured bank debt and $1.45 billion, represented by unsecured Senior Notes. The company's cash revenue was $644 million in 2000 and $274 million in the first quarter of 2001. For more information, visit www.360.net.