Metromedia Fiber emerged from Chapter 11 as AboveNet and sold to Zayo for $84 a share

Metromedia Fiber Network spent the late 1990s laying metropolitan dark-fiber rings for corporate customers, backed by Verizon and other big investors. By early 2002 the debt load was unserviceable: on April 16, 2002 the company announced that the cure period for missed interest on $975 million of subordinated debentures issued to a Verizon affiliate had lapsed, creating an event of default, on top of a $150 million senior secured credit agreement. MFN said it was negotiating a consensual restructuring with the holders of substantially all its debt, including Verizon.

On May 20, 2002 MFN and most of its domestic subsidiaries filed voluntary Chapter 11 petitions in the Southern District of New York, operating as debtors in possession. The network never went dark, and the company kept selling through the case — during 2003 it announced new contracts with the New York Mercantile Exchange, Xerox and Sprint — while cutting expenses enough to raise its cash position to $80 million by the time it exited.

The bankruptcy court confirmed the plan of reorganization on August 21, 2003, and MFN emerged on September 8, 2003 under a new name, AboveNet, Inc. A fully backstopped $50 million rights offering to creditors let the company pay its senior bank debt down to $70 million, old equity interests received no distribution and were cancelled, and the reorganized company carried new financial backing from Craig McCaw and others. Chief executive John Gerdelman pitched AboveNet as a survivor with the most extensive metropolitan fiber network and twice as many on-net buildings as its next competitor.

The recovery ran a decade. AboveNet refocused on dark fiber, connectivity and managed services, bought metro fiber that AT&T and Verizon sold off for antitrust reasons in 2007, and grew consolidated revenue to $472.5 million with $72.7 million of net income for 2011. On March 18, 2012 its board agreed to a merger with Zayo Group, and on July 2, 2012 the deal closed, converting each share into $84.00 in cash and delisting AboveNet from the NYSE.

Emerged in September 2003 with $80M of cash and bank debt paid down to $70M; by 2011 revenue reached $472.5M with $72.7M of net income before the Zayo sale.

Creditors kept the company operating as debtor-in-possession because the fiber was worth more lit than switched off, and AboveNet signed NYMEX, Xerox and Sprint inside Chapter 11.

The plan made the survivor actually survivable: $50 million of new capital through a backstopped rights offering and senior bank debt reduced to $70 million instead of a legacy claims overhang.

Cancelling old equity with no distribution cleared room for new backers such as Craig McCaw, so ownership matched the recovery rather than the bubble.

A tight product focus on metro dark fiber and managed services, deepened by buying AT&T and Verizon divested fiber, gave the company cash flows a strategic buyer would later pay for.

Fiber in the ground survives its balance sheet: keep the network lit, cut debt to a payable level, cancel bubble-era equity — and an operating asset remains worth paying up for.

AboveNet entered the Zayo transaction from a position of health: 2011 revenue of $472.5 million, up $62.8 million on 2010, with net income of $72.7 million. The $84.00-per-share cash merger closed on July 2, 2012, ending AboveNet's run as one of the few dot-com-era fiber builders to emerge from bankruptcy, rebuild and ultimately sell. Its metro fiber now sits inside Zayo's national network.