Terremarks Financial Trouble Threatens Its Latin Net Control

 
 
By eweek  |  Posted 2001-07-23 Print this article Print
 
 
 
 
 
 
 

Terremark Worldwide may run out of cash before its NAP of the Americas has a chance to become the chief Internet power broker in the Americas.

Terremark Worldwide may run out of cash before its NAP of the Americas has a chance to become the chief Internet power broker in the Americas.

But Terremarks financial woes could be a boon for BellSouths Florida Multimedia Internet eXchange (FloridaMIX), which is in a fierce price war with NAP of the Americas for Latin American data exchange traffic.

Terremark reportedly spent about $200 million to build the 750,000-square-foot Technology Center of the Americas that houses the 125,000-square-foot Network Access Point. From the huge, windowless, waterfront building in Miami, NAP of the Americas provides collocation and high-speed connections to carriers selling connectivity between Latin America and the U.S. and claims 34 customers, including anchor tenant Global Crossing and companies such as Level 3 Communications, Metromedia Fiber Network and Yipes Communications. BellSouths FloridaMIX, which also aims to become a hub of Latin American data traffic, said it has 23 signed letters of intent from customers.

Terremarks problem is lack of cash. To continue operations, it will need to raise $60 million by the end of the year, the company said in a Securities and Exchange Commission filing last week; without the infusion, there is "substantial doubt . . . about our ability to continue as a going concern." But in interviews later in the week, Terremark executives downplayed the significance of the warning.

"To steal a quote from our chairman, the company is confident that we would be able to raise — as we have done in the past — the capital to execute our plan," said Jose Segrera, Terremarks acting chief financial officer.

If Terremark fails to raise cash, a consortium of banks — led by Floridas Ocean Bank — that financed the Technology Center of the Americas construction could move to take over the facility.

Terremark has agreed to sell a waterfront property in Fort Lauderdale, Fla., to a South Florida developer for $17.2 million. The rest of the cash, Segrera said, would come from the financial markets.

The success of NAP of the Amer-icas, which opened in late June, is critical to Terremarks future. Customers, however, are not worried. "We dont have any reason to take any action. Right now, it is just speculation in the marketplace," said Ron Young, chief marketing officer of Yipes.

 
 
 
 
 
 
 
 
 
 
 

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