April 1, 2002 — (WEB HOST INDUSTRY REVIEW) — Ailing digital communications infrastructure provider Metromedia Fiber Network, Inc. announced on Monday that its board of directors has appointed a new president and CEO, as well as a new VP to help lead the company through its previously announced efforts to restructure its debts.
John W. Gerdelman was appointed president and chief executive officer of MFN, and Robert F. Doherty was appointed the company?s new vice president, finance and administration. Gerdelman, says the company, is a 20-year veteran of the telecommunications industry, holding senior positions at USA.NET and MCI Telecommunications Corporation. Doherty, says MFN, has over ten years of experience in telecommunications, including work as a managing director for the investment banking division of Salomon Smith Barney.
MFN says president and CEO Mark Spagnolo and senior vice president and CFO Randall Lay have elected to leave the company to pursue other interests.
MFN company also announced that as of the close of business on March 29, 2002, the company, failing to make approximately $8.1 million in interest payments, had defaulted on $231 million in 14.0% Term Notes due 2007 and originally issued to Nortel Networks Inc. The company says it was unable to make the payments and at the same time satisfy its near-term cash requirements.
The ?event of default? under the Nortel debt, says the company, also triggered cross-default provisions on a number of the company?s other debts, including $150 million Floating Rate Guaranteed Term Notes due 2006 and issued to a group of holders led by Citicorp, USA; approximately $62.5 million 8.5% Senior Subordinated Convertible Notes due 2003 issued to Bechtel Corporation; $50 million 8.5% Senior Secured Convertible Notes issued to Verizon; $180 million 8.5% Senior Convertible Notes due 2011 and certain of its promissory notes issued to various vendors.
The company previously announced that it deferred payment of approximately $30 million of interest due on March 15, 2002 on $975 million 6.15% Subordinated Convertible Notes issued to Verison Communications Inc. This interest has not been paid and if the 30-day period expires, says MFN, it will default on this debt as well.
Gerdelman and Doherty, says MFN, will formulate a proposal to the company?s creditors in an effort to restructure MFN?s debt. The company expects to commence negotiations shortly with the holders of its debt, regarding a consensual restructuring.
If the company is unable to reach an agreement with its creditors, it may be required to file for protection under Chapter 11 of the U.S. Bankruptcy Code.
