PSINet, the US internet service provider, stepped closer to bankruptcy yesterday after reporting net losses for 2000 of $5.03bn (£3.5bn) - up from $433m the previous year.
The company, which has warned that it could go out of business as its cash position worsens, lost $3.2bn in the final quarter compared with $223.5m at the same time in 1999 and said it had defaulted on some equipment leases.
The company, which provides web hosting services to run larger corporations' internet sites, reported revenues of $996m for the year, almost double the $534m it had in 1999, with a sharp rise in the fourth quarter.
PSINet, which is based in Virginia, said these indicators of growth were more than offset by "rapidly changing circumstances that are negatively impacting the company".
It is expected to reorganise under US bankruptcy laws although the auditors questioned its ability to survive or "continue as a going concern".
This prospect hastened when PSINet disclosed an estimated loss of $1.13bn on the disposal of discontinued operations and a charge of $2.59bn for the write-down of assets, following the decrease in the valuation of e-services companies.
The company said it had approximately $520m in cash, cash equivalents, short-term investments and marketable securities on April 10. It had $4.3bn in debt or lease obligations at the end of last year.
This reserve, even when combined with the cash it expects from asset sales, is unlikely to be enough to meet its cash needs.
PSINet has hired Goldman Sachs to help it weigh up a series of financial and strategic options and has enlisted Dresdner Kleinwort Wasserstein to explore ways to pay its creditors.
However, the company said: "Even if we implement successfully one or more of such alternatives, we cannot assure you that we will not run out of cash."
The company's reorganisation under bankruptcy laws would probably result in the stock having no value.
A pioneer business in providing internet access services to companies, PSINet is said by analysts to have foundered because it took on too many companies too quickly in non-internet areas.
Trading in its shares , which have lost 99% of their value, were halted on April 3 at a price of $3/16.
