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PSINet running low on cash

The Internet service provider misses the filing deadline for its annual financial report and says it's running out of cash and may file for bankruptcy protection.

    Internet service provider PSINet on Tuesday said it postponed the filing of its financial report for 2000, that it is running out of cash and that it may file for bankruptcy protection.

    The Ashburn, Va.-based company, which also provides Web hosting and e-commerce services to businesses, said that its 2000 financial statements are not yet finalized, meaning that it was not able to file its report to the Securities and Exchange Commission on time, the company said. The statements were due by the close of business Monday.

    PSINet has engaged outside auditing consultant PricewaterhouseCoopers and warned that it expects the auditor to give it a "going concern" qualification--that is, an expression of doubt that the company is financially viable.

    Also on Tuesday, the Nasdaq halted trading of PSINet while it seeks unspecified information from the company. The stock will remain halted until PSINet has fully satisfied the request for information, the exchange said in a statement.

    The shares ceased trading Tuesday at 19 cents. Stocks that trade under the $1 level become subject to delisting.

    Tuesday's developments are the latest in a string of bad news for PSINet. Over the past several months, its stock has been in a free-fall from a 52-week high of $51, and a number of its executives have jumped ship.

    Last month, the company announced the sale of, or plans to sell, several divisions including its e-commerce data communications and computer consulting units.

    PSINet isn't alone in facing hard times. A number of high-speed Internet service providers and the companies that supply them with DSL (digital subscriber line) connections have been in dire financial straits. Northpoint Communications last week laid off more than two-thirds of its work force and shut off service to thousands of customers.

    PSINet blamed "rapidly changing circumstances" for the financial statements delay. The company said that more restructuring and impairment charges, which may be significant, would be posted for the fourth quarter.

    The company also said that as of March 30, it had cash, cash equivalents, short-term investments and marketable securities held in financial institutions of approximately $254 million, of which about $27 million secures certain obligations.

    Even if the company succeeds in its restructuring efforts, it said it is likely that the company's stock will have no value.