In the latest sign of troubled times for digital subscriber line (DSL) service wholesalers, Catherine Hapka resigned as chairman and chief executive officer of Rhythms NetConnections Inc. on Tuesday for unspecified reasons, the company said in a release. She also gave up her seat on the company's board of directors.
Hapka helped found the company four years ago, but Rhythms has had tough times of late. The stock traded at around US$0.19 a share on the Nasdaq Wednesday afternoon, which puts it at risk of being delisted this month. The company also informed the U.S. Securities and Exchange Commission Monday that it may have to sell itself to a larger company and that its auditors are now assessing it by the "going concern'' standard used for companies likely to go out of business.
In previous statements, the company said it has enough capital to continue operations until the first quarter 2002, but will require funding beyond that.
Rhythms is one of a set of DSL service providers facing the crunch of a financial bear market, high debt levels and expectations of IT spending pullbacks. PSINet remains in a trading hold Wednesday, and may be delisted before it can return to the exchange floor.
PSINet said that the reorganization of its US$2.8 billion debt could leave its shares worthless. PSINet last traded Tuesday at US$0.19 per share before the halt. The company said it would miss the deadline for filing its financial report for 2000 because of changing financial conditions, requesting a 15 day extension, and said it expected to receive a "going concern" notice from auditors.
NorthPoint Communications Group Inc. sold most of its assets to AT&T Corp. at auction for approximately US$135 million in March. NorthPoint had been delisted, and has filed for bankruptcy protection. Its customers -- other Internet service providers which bought bandwidth from the wholesaler -- faced an abrupt shutdown of their service before California regulators stepped in to prevent NorthPoint from shutting its network down without giving 30 days notice.