April 17, 2002 -- Metromedia Fiber Network said tonight that it will restate its operating results for all of 2001 after its new auditor encountered issues with the company's financial controls and reporting.
The company said it has "been informed by KPMG LLP that they were not able to review the quarterly data ... because MFN's internal control structure and policies and procedures for the preparation of interim financial information did not provide an adequate basis for them to complete such a review."
KPMG was hired last Dec. 11 after MFN's board terminated its previous auditor, Ernst & Young. At the time, MFN said there were no disagreements with Ernst & Young over accounting issues.
Today's announcement follows a series of disclosures of financial difficulties and management changes at MFN.
On March 18 Metromedia warned that it may be forced to file for Chapter 11 protection, saying it had just $31 million in cash and $3.3 billion in debt. It has since defaulted on bond payments, raising the likelihood of a bankruptcy.
On April 1, MFN announced that president and CEO Mark Spagnolo and chief financial officer Randall Lay had left the company "to pursue other interests." That same day it said it would delay the filing of its annual report to the Securities and Exchange Commision until April 16.
In today's release, Metromedia Fiber said the filing of the Form 10-K for the year ended Dec. 31, 2001 would be further delayed.
"MFN has identified issues relating to a number of adjustments that it believes will be necessary for such quarterly periods and is working to determine the nature and amount of such adjustments," the company said.
The company also said that some holders of its class A common stock and convertible securities would be unable to sell their shares because of its inability to file its SEC documentation.
Metromedia Fiber, based in White Plains, NY, operates 24 data centers with over 1 million square feet of usable colocation space, and has deployed 2.1 million fiber miles in 36 cities. It sells fiber, network services, managed services, web hosting and colocation through subsidiaries including AboveNet, PAIX.net and SiteSmith.