Montreal-based Microcell Telecommunications Inc. says it may not be able to meet the conditions necessary to secure a $264-million line of credit.
The announcement was made on Friday in conjunction with the wireless phone company’s second quarter earnings release.
In a news release, the company stated that it is unsure if it can meet all the mandatory conditions to secure additional credit, now or in the future. In order to gain access to $264 million, Microcell must meet all the conditions, but if it fails the company says it could default on its long-term debt agreements. The company’s financial statements show it is carrying about $1.9 billion in long-term debt.
“Given this context, there is significant uncertainty regarding this company’s ability to continue as a going concern,” the company said in a release.
A positive sign for Microcell was that total revenues for the second quarter rose $12 million compared to the same period a year ago. But it did not offset expenses that caused the company to report a net loss of $199.2 million, during the three-month period ending June 30.
The number of new customers increased by 43,000 in the quarter, compared with 63,200 during the same period last year.
Microcell is forming a special committee comprised of board of directors to consider various plans of actions that could include debt restructuring, recapitalization, potential capital infusion or other type of transaction, according to the press release.
Microcell sells under the Fido brand and is the smallest of the four major wireless-phone enterprises. The company is on the Web at http://www.microcell.ca.
