America Online Latin America Inc. (AOLA) is quickly running out of funds and could soon cease operations or file for bankruptcy, it said in a regulatory filing Tuesday.
The troubled Internet service provider only has enough cash to continue operations into the third-quarter of this year, and will not be able to obtain additional financing, it told the U.S. Securities and Exchange Commission (SEC).
Given its financial troubles, the company is considering the possible sale of all or part of its businesses and assets. Even if it is successful in selling its entire business, the proceeds would not be enough to repay senior convertible notes, the company said.
The company is weighing the possibility of filing for bankruptcy under U.S. law, or filing under insolvency laws in one or more of the foreign jurisdictions in which it operates, it said.
AOLA began in 1998 as a joint venture between America Online Inc. (AOL) and the Cisneros Group to offer the AOL-branded Internet service in Latin America. The company, based in Fort Lauderdale, Florida, currently offers services in Brazil, Mexico and Argentina. It also serves members of the AOL-branded Puerto Rico service.
The company has been bleeding cash and members for some time, however, and its management concluded earlier this month that AOLA is not a going concern for financial reporting purposes.
In its last financial update, the company reported a net loss of US$23.6 million for the quarter ended Sept. 30, 2004, and 400,000 members, including those on free trials. Three years earlier, it claimed 1.15 million members.
AOLA representatives weren’t immediately available to comment Wednesday on how or when its current customers would be affected by its potential closure.