The report concerned Interoute's i-21 business. I would, therefore, appreciate your views as to the implications of this (if indeed there are any). For myself, I am uncertain of the implications to FNT, except in the context of what Caliosti has suggested (ie: that Interoute are selling FNT). If correct, this may explain some of the delays experienced to date.
The Interoute website is currently showing the following businesses in Administrative Receivership: 1) i-21 HOLDINGS LIMITED, 2) i-21 FUTURE COMMUNICATION LIMITED, 3) i-21 LIMITED.
The Reuters report from 29th November is as follows: ------------------------------------------ 29 Nov 02 UK: INTEROUTE FACES LIQUIDATION AFTER MBO IS REJECTED. (LBA) ------------------------------------------ LONDON, Nov 29 (Reuters) - Pan-European network owner Interoute headed for liquidation on Friday after leading creditor Alcatel (CGEP.PA) rejected a management buyout offer of 100 million euros ($99.4 million).
The decision by the French telecoms equipment supplier, which was owed 500 million euros by Interoute, means one of Europe's largest networks will be sold off or simply shut down to cap a miserable year for the industry.
"The UK businesses are still in receivership, while the rest of the companies are in the process of filing or have filed for liquidation," Bob McNeil, adviser to Interoute chairman James Kinsella, said in a telephone interview.
Alcatel noted that the Sandoz family foundation, a major backer of privately owned Interoute, had announced its intention to withdraw funding in September if Interoute did not radically change its business plan. "It became clear to us that they would only reinstate funding if a management buy-out went ahead. We did not feel this option was in the interests of Alcatel," a spokesman said.
Sources close to the Sandoz foundation - set up in memory of the founder of Europe's third-biggest drugmaker - say it supported Interoute's management and its refinancing plans.
Interoute, having invested heavily in the construction of an 18,000-kilometre (11,180-mile) data and voice network around Europe, started restructuring several months ago. This involved halving its workforce and raising new financing, it said. But Alcatel sent in receivers last week to recover loans after rejecting the new business plan. The French company says it already made provisions in its third-quarter figures to cover the risk that Interoute might default on its loans.
Interoute had already been involved in the demise of Europe's largest data network earlier this year, snapping up the Ebone network from KPNQwest in July, as the U.S.-Dutch group languished in bankruptcy, for 15 million euros.
And having looked into selling itself, Interoute now expects that a sale of all its assets would bring in less than one percent of the total investment, or about 15 million euros, according to a source familiar with the situation.
So Interoute decided two weeks ago to put its i-21 network - billed three years ago as what would be Europe's largest network - into administration. The declaration of receivership by Alcatel followed. Kinsella, former president of news Web site MSNBC.com and the man who sold Dutch Internet service provider World Online near the market's peak, became Interoute chairman in July. (Additional reporting by Rebecca Harrison). (C) Reuters Limited 2002.
----------------------------------------------- 20 Nov 02 UK: UPDATE 3-ALCATEL TIPS INTEROUTE INTO RECEIVERSHIP. (LBA) ----------------------------------------------- By Braden Reddall and Rebecca Harrison ----------------------------------------------- LONDON/PARIS, Nov 20 (Reuters) - French telecommunications equipment supplier Alcatel said on Wednesday it had sent in receivers to recover loans from Interoute after the British telecom firm's pan-European network went into administration.
Interoute said Alcatel, a leading creditor and supplier to the privately held firm, had rejected a crucial refinancing offer, threatening the future of yet another European network.
Interoute had already been involved in the demise of Europe's largest data network, buying up the Ebone network from KPNQwest in July as the Dutch group languished in bankruptcy.
A source familiar with the situation said Interoute had guaranteed Alcatel 20 percent of its 500-million-euro ($502 million) investment. But the French company declined to accept that and called in accounting firm Deloitte & Touche to act as receiver, which is likely to mean a fire sale for Interoute's network.
"We are still talking to Interoute to find a solution but have exercised our right to bring in receivers," an Alcatel spokesman said.
Alcatel had already taken provisions in its third-quarter figures to cover the risk that Interoute might default on its loans, the spokesman said. He declined to give a figure but said it would have a limited affect on Alcatel's own results.
STEP TOO FAR
Interoute had invested heavily in the construction of an 18,000-kilometer (11,180-mile) data and voice network around Europe but said on Wednesday it had started a restructuring several months ago which involved halving its staff and raising new financing.
An agreement with Alcatel about new vendor financing had been crucial to Interoute's refinancing plans.
The source said Interoute's new business plan had the backing of all its original investors, including the Sandoz Family Foundation, which had sunk around 1.1 billion euros into Interoute. Alcatel's approval would have been the final step in the refinancing process.
"And the last step was a step too far ... (Alcatel) did not want to play ball," the source said.
Sources close to the Sandoz foundation - set up in the memory of the founder of Europe's third-biggest drugmaker - insisted it remained supportive of Interoute's management and restructuring plan and hoped it would succeed.
They said the foundation was committed to the business and wanted its management to reach an agreement with Alcatel, so the company could survive.
REDUCED PRICE
Interoute had asked investment banker Goldman Sachs to explore the possibility of selling the firm, but there were few potential buyers and it might only expect to bring in about 1 percent of the total investment, or about 15 million euros, according to the source familiar with the situation.
This compares with the 15 million euros Interoute paid for Ebone, which in turn had been about 2 percent of the 645 million spent on Ebone less than a year before. Interoute decided last Friday to put its i-2network - billed three years ago as what would be Europe's largest network - into administration.
Under its old business plan, Interoute would have needed another 1 billion euros to hit break-even by around 2007, and all its backers had balked at the investment. But the source added that the new business plan had required far less.
Interoute brought in James Kinsella, former president of news Web site MSNBC.com and the man who sold Dutch Internet service provider World Online near the market's peak, to be its chairman in July. ($1=.9967 Euro) (Additional reporting by Bernhard Warner). (C) Reuters Limited 2002.
ATC Price at posting:
0.0¢ Sentiment: None Disclosure: Not Held
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