Globix Reports on Restructuring

Webhosting concern Globix reported significant restructuring charges as the company marched through its prepackaged bankruptcy.

by AtNewYork Staff [May 16, 2002]

Restructuring costs kept adding up for Internet hosting company Globix during the second quarter, in which it declared a net loss of $87.6 million on revenues of $21.4 million.

The results were driven largely by a $48.4 million charge it took to reduce the size of a data center in its London facility, as well as asset impairment charges.

It was the end of a particularly rough quarter for Globix, during which it and two wholly owned domestic subsidiaries filed Chapter 11 reorganization petitions under a pre-packaged plan with creditors. In April Globix emerged from bankruptcy protection after a federal court approved its restructuring plan.

During the same, year-ago quarter, the net loss was $33.7 million on revenues of $26.8 million. Sales were off by 20 percent but the cost of revenues for the telco also fell by 7 percent to $9.7 million.

The results came one day after the New York-based company announced that Chief Executive Officer Peter Herzig would vacate the position and be replaced by Peter Stevenson, who was also named president. Herzig is to serve as vice chairman of the board of directors.

Its net loss on cash earnings (or earnings before interest, income taxes, depreciation and amortization and other non-operating expenses including restructuring charges and impairment of intangible assets) was $9.8 million for the quarter, compared to $12 million for the same quarter last year.

The company ended the quarter sitting on $56.5 million in cash.

In a statement, Herzig said he was pleased to see the company emerge from its bankruptcy reorganization. "We have a strong cash position and we will continue to closely manage costs as we work towards our goal of turning the corner to profitability."

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