KPNQwest network granted more time
Published: 12 Jun 2002 11:34 BST
Investment bank Bear Stearns has just under three weeks to find a buyer for the KPNQwest network, after an increased offer from shareholders KPN allowed the liquidators to keep the network running. However, rival providers say the value in the network is now negligible, and customers will move to established providers.
"Long term, KPNQwest is just a blip," said Christian Moeller, regional president of Sprint Europe. "It is no longer a business. What you have is a network at significant risk of failing." Given the over-capacity in long-haul fibre across Europe, he expressed doubt that anyone would offer much for it. Moeller claimed to already have picked up several ex-KPNQwest customers, but was unable to name names.
"The administrators did an amazing job," said a source close to Bear Stearns. "The damage a disconnection would do to large users had become brutally apparent. The network is on till July, by which time Bear Stearns should have sold the assets."
While some users such as cable TV company UPC have moved away, others such as Hewlett-Packard and Nokia appear to be sticking with the KPNQwest network, aware of the disruption that a sudden change would cause them. Administrators used this to offer a one month stay of execution for the network if enough customers paid a month's fees in advance by yesterday.
In the end, the administrators did not reach their target (estimated at 20m euros to 25m euros, or £12m to £16m) by the deadline, but they took into account money promised, and the value of the remaining large customers -- essentially the only value in KPNQwest. "Most large customers are very supportive of the process," said the source.
Less supportive has been KPN, a shareholder that is disputing its debts to KPNQwest, put by some as high as 23m euros. In talks yesterday, KPN was forced to raise a 4m euro payment to 8.8m euros, according to sources.
KPNQwest's creditors, which include the equipment vendors Alcatel, Foundy Networks, Cisco Systems and Nortel Networks, are not expected to scupper the plan as they have little chance of seeing much of the money they are owed otherwise. Auditors must also check KPNQwest's books.
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