KPN, the Dutch telecommunications company that is a 40 per cent stakeholder, will provide interim funding to keep the network running. Agreement is close with two other network providers to provide cash.
KPNQwest, the Dutch communications company, is to be broken up and sold for next to nothing after yesterday abandoning hopes of finding a financial saviour and filing for bankruptcy.
Bondholders and investors will be left with nothing when the group's assets - principally a 25,000 kilometre data network that is Europe's largest - are carved up and sold for as little as three US cents in the dollar, according to a person close to events. Two years ago, the group was valued at €40 billion.
The collapse leaves 100,000 corporate clients including Dell, IBM and Nokia, and the customers of several European internet service providers scrambling to switch traffic to alternative providers.
KPNQwest indicated it was hopeful of performing an "orderly migration" over the next eight to 10 weeks as its systems are wound down, avoiding what company insiders call "the doomsday scenario" of a network shutdown.
Customers will be redistributed among other providers across Europe. Ironically, the glut of capacity - a significant factor in KPNQwest's downfall - may ease that transition.
A skeleton staff will be retained to allow for that, but many of KPNQwest's 2,700 employees face redundancy.
KPNQwest's central European business is likely to be sold within days for barely half the €100 million it had been expected to fetch.
Founded in November 1998 as a venture between Qwest Communications of the US and KPN, the data carrier was hammered by a slump in demand for wholesale data capacity.
In a statement yesterday, it said its predicament left it with no choice but to file for bankruptcy. - (Financial Times Service)
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