Network builder Viatel this week filed for bankruptcy protection in the US while at the same time pledging the future of its business in the UK and Europe, where it has invested heavily in creating infrastructure.
The company is characterising its move into Chapter 11 bankruptcy as a way of keeping about 1000 creditors at bay while it searches for a buyer or partner.
Mired in debt and hampered by lack of sales, of both capacity and services, in a slowing economy, Viatel has been struggling for a while. It announced last month that its net loss for 2000 was $1.57bn (Pounds 1.09bn).
At the same time it said it was reneging on interest payments on the massive debt it has incurred building out its infrastructure, and was laying off 700 workers, which was then around 30% of its workforce.
Another 350 people, mainly in the US, are out in this latest move as it closes down its residential voice business to concentrate on the data side.
Viatel says its assets – which include a 10,400-route kilometre pan-European network, a 160Gbps transatlantic cable, and metropolitan fibre networks being built in seven European cities, including London – are worth $2.12bn. It claims debts of $2.68bn.
The company’s share price, which has traded as high as $55.50 in the last 12 months, was halted on Wednesday at 26 cents, down 93%.
Back in April, Viatel announced it was looking for a partner or a buyer. While some analysts mention the likes of Cable & Wireless and France Telecom as possible suitors, others think that US energy companies – cash rich because from windfall ‘energy crisis’ profits – may see the Viatel network as a way to move into a new business.