Metromedia Fiber Files Chapter 11 Petition

Metromedia Fiber Network Inc. filed the second-largest bankruptcy in the telecommunications industry, which has been slammed by falling prices, slack demand and stiff competition. The company has debt of about $3.3 billion.

Metromedia Fiber, which is backed by Verizon Communications Inc. and other wealthy investors, said it will continue to operate during its Chapter 11 bankruptcy restructuring.

It hired Impala Partners to assist during the reorganization and UBS Warburg to advise on its strategic alternatives.

Metromedia, which builds high-speed fiber-optic networks in cities, said it reached an agreement with its senior secured lenders that will allow it to fund its operations while it cuts costs and reorganizes. The New York-based company said it would shed idle data centers or nonessential offices, reject burdensome vendor contracts and cut jobs.

In March, Metromedia said it planned to sell the facilities of its Internet exchange, PAIX, for about $50 million in cash and an equity interest in the buyer.