Pangea, the fibre optic network operator, has begun insolvency proceedings. The company has spent $450 million building a high capacity fibre optic cable system serving the UK, Northern Europe, Scandinavia and the Baltic region but predicts sales of just $15 million for the 2001 financial year.
The company was founded in 1999 and succeeded in attracting a total of $450 million in funding. This total includes $263 million debt from Morgan Stanley and equity from a consortium of US venture capitalists led by Dolphin Communications Partners and including Columbia Capital, HarbourVest Partners, Madison Dearborn Partners and Norwest Venture Partners.
Pangea’s network was designed to link Northern Europe, Scandinavia and the Baltic region; an area the company thought had been neglected by the major network providers for Western Europe. The company’s 7,200 kilometre of cable went into service at the beginning of the year, providing high capacity voice, data, video and Internet transmission to communications companies including Tele2, Eesti Telefon and Tiscali. Pangea is registered in Bermuda with headquarters in New York and a network operating centre based in Amsterdam.
Despite the depressed state of the telcoms sector receivers Grant Thornton expects to find a buyer for the company in a matter of weeks. In the mean time customer service will be unaffected.
Ipe Jacob, of Grant Thornton, said: “Recent changes in the telecoms and capital markets have impacted the group’s business plan and a formal insolvency process is required at
holding company level to enable a moratorium during which forward options can be explored.”