The Internet service provider, which earlier this month said it may file for Chapter 11 bankruptcy protection, announced it would default on May equipment lease payments, which total $16.6 million. That sum will be added to $68.1 million in previous default notices from manufacturers that loaned PSINet money to buy their equipment. Often when a borrower defaults on these types of equipment loans, the lender will repossess the equipment.
PSINet, which on Monday appointed a new chief executive and formed a reorganization committee, has another set of corporate bonds coming due June 1, with interest payments of more than $38.5 million scheduled. Another $16.5 million in equipment lease payments are also due next month.
"The actions announced today will help preserve cash while we pursue restructuring alternatives that assure the long-term viability of our assets and businesses and address the requirements of our creditors," Chief Executive Harry Hobbs said in a statement.
Eric McErlain, a PSINet spokesman, declined to comment on when the company might file for bankruptcy.