The list of law firms filing class action lawsuits on behalf of investors against Metromedia Fiber Networks is growing as the optical IP Internet infrastructure provider attempts to put in place its long-awaited financing. Law firms Abbey Gardy, Schriffin & Barroway, Stull, Stull & Brody and Cauley, Geller, Bowman & Coates are among the 10 or so firms to date that filed lawsuits on behalf of investors last month, alleging that Metromedia officials issued a series of false statements starting on Jan. 8, when they announced Metromedia had obtained a commitment for a fully underwritten credit facility from Citicorp. Only on July 2 did Metromedia say the facility was subject to commitment from other lenders in the amount of $287.5 million.
The complaints allege that throughout the class action period, the defendants knew Metromedia did not have the credit facility and the securities were artificially inflated. Kara Carbone, spokeswoman for Metromedia declined comment on the lawsuits, but said Citicorp has committed $150 million of which $62.5 million is from the bank. A commitment letter of $235 million of vendor financing was also obtained on Aug. 30 and the expiration date of the vendor-financing letter is Sept. 4. The vendor financing is subject to the closing of the Citicorp facility, commitments from other sources of $230 million and consents from the holders of the company's 10% senior notes due 2008 and 2009, she stated. The new financing was pursued after Metromedia twice failed to meet Citicorp deadlines for the original $350 million funding facility. Calls to Citicorp officials were not returned.