Lynchpin of Internet traffic files for bankruptcy

By Alun Williams

Posted on 31 May 2002 at 18:00

KPNQwest - the pan-European data communications company and the largest carrier of IP traffic in Europe - has filed for bankruptcy.

The company, which was already under administration, has issued a formal statement: 'The efforts to try and sell certain non-critical assets in order to secure sufficient cash proceeds to meet the ongoing obligations of the company have not been successful. This situation is not expected to change over the next 24 hours.`

The statement continues, 'the administrators and the management board of KPNQwest N.V. have no other choice than to request the District Court of Haarlem, The Netherlands, to convert the moratorium into a bankruptcy for KPNQwest NV.' At the same time, a number of KPNQwest subsidiaries across Europe will file for protection under their local jurisdictions.

The company - the product of a joint venture between the Dutch KPN and the American Qwest - also warns that 'there is substantial risk that there may be no underlying value to either its debt or equity securities'.

Talks have been held with AT&T over a possible rescue package, but appear to have stalled.

The company operates EuroRings, which it claims to be the fastest fibre optic backbone network in Europe, connecting 60 cities in 18 countries. This is connected to Qwest's fibre infrastructure in North America and Asia.