SEATTLE (Reuters) - America Online Latin America Inc. South America,
said on Tuesday that it was running out of cash and may shut down or
file for bankruptcy protection.
Unless AOL Latin America finds a buyer for its assets, it
will have to close down operations, the Fort Lauderdale,
Florida-based company said in a regulatory filing with the U.S.
Securities and Exchange Commission.
AOL Latin America, founded as a joint venture between America Online
Inc. and the Cisneros Group at the start of the Internet bubble in
1998, has since struggled to become profitable.
The loss-making company, which provides Internet dial-up service
mainly in Brazil, Mexico and Argentina, stopped counting non-paying
subscribers in 2003 as the SEC investigated the company's methods in
counting subscribers.
Although AOL Latin America has enough cash to stay in business through
the third quarter of this year, it said it may have fallen into
default with Time Warner Inc. which holds $160 million of senior
convertible notes in the company.
"We do not believe that our common stock has, or will have, any
value," the company said in the filing.
AOL Latin America said it is no longer pursuing any financing.
"We are not currently expending resources to obtain financing from any
source because we believe that any efforts to obtain financing would
be futile based on past experience," the company said.
Other Internet service providers have also struggled to stay in
business in Latin America. StarMedia Network Inc., Terra Lycos and
Yahoo's efforts to build an access provider have fallen flat.
AOL Latin America went public on the Nasdaq in 2000 at the low end of
the expected range, with investors expressing concern over its growth
prospects.
The shares fell to 22 cents in after-hours trading, less
than half of their closing price of 47 cents. It peaked above
$8 shortly after its initial public offering.
Copyright 2005 Reuters Limited.
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