March 19, 2001 8:35am
PSINet names new execs, hopes to
restructure debt
By Margaret Kane ZDII
Struggling Internet service provider PSINet Inc.
named a new president and chief operating
officer, and hired a financial advisor to explore
restructuring its debt to bondholders and others.
The company also announced the resignation of James
F. Cragg, a former executive vice president and
divisional president who oversaw North American
operations.
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Even if PSINet is successful in restructuring its debt “it
is likely that the common stock of the company will
have no value, and the indebtedness of the company
will be worth significantly less than face value,” the
company said.
Dresdner Kleinwort Wasserstein was hired to handle
the debt restructuring, and will work with Goldman
Sachs, which was hired last November to advise the
company in financial alternatives, including the sale of
non-core businesses as well as the possible sale or
merger of the entire company.
PSINet had already announced plans to sell its
e-commerce data communications division in a deal
worth $300 million. The company, whose shares have
been in freefall since hitting a 52-week high of $51,
closed Friday at 72 cents. The shares tumbled even
further in pre-market trading Monday, dipping 17 cents
to 55 cents.
The struggling firm had warned last year that it would
need additional funding to make it through 2001. But it
seems that the $300 million may not be enough.
PSINet is expected to lose $1.06 per share for the
fourth quarter, and $5.07 per share for the fiscal year,
according to a survey of analysts by First Call.
Harry G. Hobbs, who will take on the president and
COO positions, previously served as executive vice
president and divisional president of PSINet’s
international operations.
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