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Tuesday, 17 April, 2001, 21:48 GMT 22:48 UK
Leading US internet firm may sink
PSINet's website
The leading internet service provider PSINet, which hosts company web sites, may go out of business after having lost $3.2bn during the fourth quarter and defaulted on loan repayments linked to equipment leases.

The company is now searching for a way to sell all or some of the company or restructure its debts in an effort to save thousands of jobs.

"These efforts are likely to involve reorganisation under the federal bankruptcy code," the company said in a statement.

"Even if one or more of these alternatives can be successfully implemented, there can be no assurance that the Company will not run out of cash," the statement said.

Cashflow problems

Earlier this month, the company had warned that it was running out of cash and trading in its shares was halted on 3 April.

At that stage, the shares had lost 99% of their value in a year.

PSINet's cash reserves stood at $520m on 10 April.

But with debts and lease obligations totalling $4.3bn by the end of 2000, the company's shares are probably worthless, even if it is reorganised, the PSINet predicted.

The company is in talks with its creditors which have agreed to give it breathing space until 27 April.

A giant tumbles

A year earlier, PSINet's losses for the fourth quarter were tiny in comparison to the latest result, at $223.5m.

During 2000 as a whole, PSINet incurred a net loss of more than $5bn, over five times as much as it earned that year.

PSINet's troubles have been caused by the slowing US economy, tighter capital markets, stiff competition and the inability of some of its customers to pay their bills, the company said.

The company has fallen from great highs.

PSINet is "currently providing direct access in more than 900 metropolitan areas in 27 countries on five continents", the statement said.

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31 Jan 01 | Business
Europe's web firms keep burning cash
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