Allied Fiber assets up for auction

PMCM, LLC, a Phoenix Capital Resources affiliate, has announced it will supervise the auction of Allied Fiber's network assets. The auction comes after a petition was filed for protection under Chapter 11 of the U.S. Bankruptcy code on April 20, 2016 (Case No. 16-11008 (KG); see "Allied Fiber Cries Uncle, in BK").

Bids are now being accepted for Allied Fiber's network through July 7, 2016. The auction will be held July 12, 2016. All sales must be approved by the U.S. Bankruptcy Court, District of Delaware, which is the presiding authority on the case.

The fiber-optic network assets are officially owned by Allied Fiber subsidiaries AFSoutheast, LLC; Allied Fiber -- Georgia, LLC; and Allied Fiber -- Florida, LLC. They consist of 736 route miles (and 270,672 fiber miles) of fiber-optic cable that run from Miami, FL, to Atlanta, GA, via Jacksonville, FL (see "Allied Fiber opens southeast fiber-optic network route" and "Allied Fiber's Southeast Route reaches Atlanta"). The network connects 11 colocation facilities which dot the network at roughly 60-mile intervals. The facilities average approximately 1,200 sq. ft. and feature backup power, energy efficiencies, round-the-clock security, hurricane resistance, and potential for more space, according to PMCM.

The network also offers direct access to two new undersea cable landing stations in Jacksonville and four existing landing stations in Boca Raton, FL. Allied Fiber had leveraged these to attract business from submarine network operators (see, for example, "Telefonica signs dark fiber agreement with Allied Fiber").

Allied Fiber, founded by Hunter Newby, aimed to offer dark fiber and carrier-neutral colocation services in areas not served by existing networks. The Southeast Route currently up for auction was part of what was envisioned to be a nationwide ring of dark fiber and colocation assets (see "Allied Fiber lines up funding for first phase of nationwide, carrier-neutral dark fiber network"). Initially, the company expected its first route to connect New York, Chicago, and Ashburn, VA.

While the company signed contracts with a variety of service providers once the Southeast route opened for business, major investor Strome Mezzanine Finance, Fund IV, LP determined that revenues were not keeping up with expenses and filed for bankruptcy, say press reports. According to an article by Law360 that describes the subsequent court hearing, AF-Southeast LLC could be as much as $116 million in debt; about $27 million of the debt accrued from spending on rights-of-way for the abandoned Northeast route. Meanwhile, the company projects about $4.4 million in expenses over the next 90 days against only $69,000 in revenue, Law360 reports. An attorney for the Office of the U.S. Trustee suggests Allied Fiber's network assets have already been on the market for 18 months without attracting a buyer.

Those interested in more information on the auction may contact PMCM's Michael Jacoby.

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For more information on high-speed transmission systems and suppliers, visit the Lightwave Buyer's Guide.