With a high level of indebtedness, aggravated by the Argentine economic downturn, Nasdaq listed Impsat Fibre Networks was unable to meet its debt repayments in December 2001. Again it defaulted on interest payments in January and February 2002, and had to undertake a financial restructuring plan to reduce its total consolidated indebtedness by approximately $680 million.
In March 2002, Impsat announced that it had reached non-binding agreements in principle with vendors and bondholders in support of the plan that involves, among other things, the conversion of certain debt notes into company stock.
In June 2002, Impsat filed for Chapter 11 in New York, following the signing of binding lock-up agreements with creditors representing over 59% of the company’s debt. Impsat expects to emerge from Chapter 11 in fourth quarter 2002.
Impsat’s subsidiaries, which are independent legal entities, continue to operate without interruption and serve their customers normally.
For the six months from January to June 2002, Impsat recorded a net loss of US$144 million. The company’s revenues totalled US$121.7 million, 27% lower than the same period of the previous year.
This drop in earnings was primarily caused by the recession in Argentina and the devaluation of the peso following the implementation of the February 2002 ‘pesification’ decree. In local currency terms, Impsat Argentina’s revenues from services for the six months ended June 2002 actually increased by 37.4% compared with the same periods in 2001.
Revenues were also adversely affected by the decline in the Brazilian economy and the devaluation of the real. However, in local currency terms, Impsat Brazil’s revenues for the six months ended June 2002 increased by 12.0% as compared to the same periods in 2001.
Also in Venezuela the company was adversely affected by political and economic uncertainty. In February 2002, the government floated its currency leading to a devaluation of the Venezuelan bolivar.
And Impsat’s revenues from services in Colombia were negatively impacted by the country’s economic recession, the devaluations of the Colombian peso, and the enduring civil war.
Impsat is 19% owned by BT, and provides broadband, data, Internet and voice services to almost 3,000 corporate customers, telecom carriers, ISPs and government bodies in Latin America. The company has operations in Argentina, Colombia, Venezuela, Ecuador, Mexico, Brazil, Peru, Chile and US.
British Telecom (BT);
Impsat Fiber Networks.
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