Metromedia Fiber Networks, a provider of internet infrastructure, is in financial difficulty just weeks before the Taoiseach is scheduled to initiate a $100 million investment in Dublin.
The company, which plans to host the Microsoft. Net project from its internet data centre in Citywest, has just two weeks to raise $287.5 million or face possible bankruptcy.
Telecoms experts said last night Metromedia's financial problems held "serious implications" for Ireland. The company has built a $40 million fibre ring and $75 million internet data centre in Dublin.
The Taoiseach is officially set to introduce Metromedia's data centre in early September, which would enable Microsoft to sell software over the internet using its connectivity.
However, shares in Metromedia have tumbled to just 83 cents this week,down from a 52-week high of more than $42. This follows speculation that the e company may not be able to raise funding.
US bank Citigroup told Metromedia this week it would grant a two-week extension to a commitment to provide $62.5 million in funding, if other sources committed to provide $287.5 million. This extension followed Metromedia's failure to raise the funding by a July 31st deadline set by the bank. Metromedia said it had received commitments for $180 million of the $287.5 million.
In addition, Metromedia must also line up $200 million of vendor financing, for a total financing package of $550 million.
Ratings agency Standard & Poor's downgraded Metromedia's outlook on Thursday to "developing" from "negative" over concerns the company may not be able to pay its bank loans.
Microsoft's decision to make the Republic its European hub to distribute software electronically has been held up as the major success for the government's e-business strategy.
This project could generate billions of pounds of revenue in years to come.
Metromedia's difficulties follow shortly after the bankruptcy of competing infrastructure firm 360Networks, which had also invested heavily in the Irish marketplace.
Newspaper reports in the US have pinned Metromedia's hopes on gaining financial backing from its its billionaire backer, Mr John Kluge.
