PSINet defaults on financial agreements

PSINet said Tuesday it would default on $20.1 million in interest payments on corporate bonds due Tuesday, and would miss lease payments to several equipment companies.

The Internet service provider, which earlier this month said it may file for Chapter 11 bankruptcy protection, announced it would default on May equipment lease payments, which total $16.6 million. That sum will be added to $68.1 million in previous default notices from manufacturers that loaned PSINet money to buy their equipment. Often when a borrower defaults on these types of equipment loans, the lender will repossess the equipment.

PSINet, which on Monday appointed a new chief executive and formed a reorganization committee, has another set of corporate bonds coming due June 1, with interest payments of more than $38.5 million scheduled. Another $16.5 million in equipment lease payments are also due next month.

"The actions announced today will help preserve cash while we pursue restructuring alternatives that assure the long-term viability of our assets and businesses and address the requirements of our creditors," Chief Executive Harry Hobbs said in a statement.

Eric McErlain, a PSINet spokesman, declined to comment on when the company might file for bankruptcy.