PSINet Falls on Debt Restructuring Plan

PSINet (Nasdaq: PSIX) was down 19 U.S. cents at 53cents in Monday morning trading after the Internet services company said ithired a financial adviser to help restructure its debt.

At the same time, the company said its common stock is likely to have “novalue.”

PSINet, based in Ashburn, Virginia, said it hired Dresdner Kleinwort Wasserstein to help it “explorealternatives” to restructure its debt, and would begin by consulting with PSINetbondholders.

The firm will also work with Goldman Sachs, an investment bankhired last November to help the company find buyers for some of itsbusinesses or the company as a whole.

Yet even if those efforts are successful, PSINet said, “it is likely that thecommon stock of the company will have no value, and the indebtedness of thecompany will be worth significantly less than face value.”

PSINet also said it hired Harry G. Hobbs as its new president and chief operating officer. The 47-year-old Hobbs, who previously been president of international operations, will be charged with overseeing all of the company’s worldwide operations.

Meanwhile, the firmannounced the resignation of James F. Cragg, executive vice president with responsibility for North American operations.

In a separate statement, PSINet said it sold its PSINet Transaction Solutions business to an investment group led by GTCR Golder Rauner for $300 million in cash.

PSINet, which provides Web hosting, switching, and other retail andwholesale Internet services, has taken a beating along with other Internetstocks in recent months. A year ago, the stock traded above $55.

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