TeleBermuda Ltd., to delay two major projects yesterday after mounting debt appears to have rattled investors.

The Canadian company announced it was to scale back capital expenditures by more than $1 billion to try to ensure it will meet its debt covenants.

"It's not that we're not going to build again, we're just not going to build today,'' chief executive Greg Maffie told analysts in a conference call.

Its stock opened down about 19 percent in both Canada and Toronto, but recovered slightly to a nine percent loss at $1.38 on the Nasdaq.

360networks said it will suspend work on its 260pacific and 360asia undersea projects connecting Asia and North America, and said it will meet customer demand in the short term by buying capacity rather than building it.

Goldman Sachs cut its rating on 360networks yesterday morning to market perform from market outperform, saying it does not expect the shares to recover in the near term.

The indefinite delay of building an undersea Pacific cable will prove positive for competitors, in that bandwidth supply will drop, and prices will go up for those capturing more of the market, Goldman Sachs said in a morning note.

Goldman said competitors such as Asia Global Crossing Ltd., its largest shareholder Bermuda's Global Crossing and Bermuda's TyCom Ltd. will enjoy higher revenues because of 360networks decision to delay expansion into Asia.

360networks also reported a more than doubling of its third quarter loss to $106 million, and revised guidance for 2001 cash revenue to a range of $1.2 billion to $1.4 billion from a range of $2.4 billion to $2.6 billion.

360networks said it was forced to revisit its business plan in light of tight capital markets that have reduced customer demand for new fibre capacity, but said it still expects to become "free cash-flow positive'' in 2002.

As part of the new business plan, the company is talking with its existing shareholders about $300 million in additional working capital and it expects to get the funding by issuing new senior notes.

Lower demand for new fibre capacity has helped drive down the 360networks share price in recent weeks amid investor concern over its $2.5 billion debt and its ability to complete its contracts.

But the firm said it still expects to become cash flow positive in 2002.

Cash revenues were $274 million for the quarter, up from $80 million. Cash revenue is revenue, as determined by generally accepted accounting principles, adjusted for changes in the cash portion of deferred revenue.

The changes in its transpacific and Asian projects represent the bulk of the company's plan to reduce capital expenditures in 2001 from a range of $3.5 billion to $4 billion to a range of $2.2 billion to $2.4 billion.

It also revised guidance for 2001 cash revenue from a range of $2.4 billion to $2.6 billion to a range of $1.2 billion to $1.4 billion.

The company said it is reviewing all of its network and might not activate some sections as soon as originally planned depending on customer demand. "We will build it as they come not in hopes they will come,'' chief financial officer Vanessa Wittman said.

In late April, telecoms equipment maker Alcatel said it booked provisions to cover any losses that might stem from converting bonds issued by 360networks into shares.

Alcatel bought $700 million of 360networks' bonds as part of a supply deal with the Canadian company for the building of a transpacific undersea link.