AOL LatAM running out of cash
America Online Latin America, the beleaguered provider of Internet services in South America, said on Tuesday that it was running out of cash and may shut down or file for bankruptcy protection.
Unless AOL Latin America finds a buyer for its assets, it will have to close down operations, the Fort Lauderdale, Florida-based company said in a regulatory filing with the U.S. Securities and Exchange Commission.
AOL Latin America, founded as a joint venture between America Online Inc. and the Cisneros Group at the start of the Internet bubble in 1998, has since struggled to become profitable.
The loss-making company, which provides Internet dial-up service mainly in Brazil, Mexico and Argentina, stopped counting non-paying subscribers in 2003 as the SEC investigated the company's methods in counting subscribers.
Although AOL Latin America has enough cash to stay in business through the third quarter of this year, it said it may have fallen into default with Time Warner, which holds $160 million of senior convertible notes in the company.
"We do not believe that our common stock has, or will have, any value," the company said in the filing.
AOL Latin America said it is no longer pursuing any financing.
"We are not currently expending resources to obtain financing from any source because we believe that any efforts to obtain financing would be futile based on past experience," the company said.
Other Internet service providers have also struggled to stay in business in Latin America. StarMedia Network Inc., Terra Lycos and Yahoo's efforts to build an access provider have fallen flat.
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