KPN cuts off KPNQwest , but talks continue
12 July 2002 -- KPN says that the foundation it formed with other customers of its 40%-owned subsidiary KPNQwest NV - to keep the network in operation after KPNQwest declared bankruptcy at the end of May - has cut off funding.
12 July 2002 -- After lender banks withheld cash collected from customers to keep the network running in June, Amsterdam-based operator KPN NV says that the foundation it formed with other customers of its 40%-owned subsidiary KPNQwest NV - to keep the network in operation after KPNQwest declared bankruptcy at the end of May - has cut off funding. However, this does not mean the immediate shutdown of KPNQwest's network.
This came after liquidators declined its offer for part of the network (the largest data network in Europe). Most KPNQwest customers have now switched to other providers, KPN says.
"The receivers and the banks have still not responded positively to KPN's offer to take over remaining sections ... of the KPNQwest network in Northwestern Europe," said KPN, which was said to be offering Euro15-20m for key parts of the 25,000km pan-European data network (less than 10% of the Euro220m the lender banks are owed). Bondholders and shareholders are unlikely to recover anything.
KPNQwest's liquidators and lender banks - which include Citigroup, Deutsche Bank and ABN AMRO - had hoped to sell the network whole. However, the main bidder, the USA's AT&T, was scared off at the end of June by legal uncertainties, exacerbated by fears over its book-keeping as well as unpaid bills to suppliers and a complicated ownership structure. The assets of KPNQwest are under bankruptcy procedures in nearly a dozen countries.
The banks have been frustrated by the liquidators' inability to attract higher offers. Parts of the network in France, Italy, Germany and Finland have already been sold, but KPN claims its offer is the only concrete one which the receivers have for the West European section of the network (which includes rings in Britain, The Netherlands, Germany, and France, as well as a transatlantic link and a network operations centre). Administrators said talks would continue.
Without funding, KPNQwest's trustees will have little choice but to shut down its network as workers in charge of it have only been paid until 19 July.