##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D. C. 20549
 
 
 FORM 20-F/A
 
 
 (Mark One)
 o
    
    REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF
1934
 OR
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2004
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from   to
 
 o
    
    SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 Date of event requiring this
shell company report
 
 Commission File Number: 000-50556
 VIATEL HOLDING (BERMUDA) LIMITED
  Not applicable
 Bermuda
 Inbucon House
Wick Road
Egham, Surrey TW20 0HR
United Kingdom
    Common Stock, Par Value US$ 0.01 Per Share
    þ o
 o þ
 o þ
 
 o o




---



##### 



This Amendment contains the following amended items:
 
 
  
 TABLE OF CONTENTS
 PagePART I
    
    
    5Item 1. Identity of Directors, Senior Management and Advisers
    
    
    5Item 2. Offer Statistics and Expected Timetable
    
    
    5Item 3. Key Information
    
    
    5Item 4. Information on the Company
    
    
    18Item 5. Operating and Financial Review and Prospects
    
    
    45Item 6. Directors, Senior Management and Employees
    
    
    60Item 7. Major Shareholders and Related Party Transactions
    
    
    67Item 8. Financial Information
    
    
    70Item 9. The Listing
    
    
    73Item 10. Additional Information
    
    
    74Item 11. Quantitative and Qualitative Disclosures About Market Risk
    
    
    88PART II
    
    
    91Item 12. Description of Securities other than Equity Securities
    
    
    91Item 13. Defaults, Dividend Arrearages and Delinquencies
    
    
    91Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
    
    
    91Item 15. Controls and Procedures
    
    
    91Item 16A. Audit Committee Financial Expert
    
    
    93Item 16B. Code of Ethics
    
    
    93Item 16C. Principal Accountant Fees and Services
    
    
    94PART III
    
    
    95Item 17. Financial Statements
    
    
    95Item 18. Financial Statements
    
    
    95Item 19. Exhibits
    
    
    95Financial Statements
    
    
    F-1EX-12.1EX-12.2EX-13
  2




---



##### Table of Contents



Presentation of Financial Information
 
  Predecessor and Successor
   Comparability of Financial Information
  Forward-Looking Statements
   
    
    the beliefs and expectations of management;
    
    our business plan, its advantages and our strategy for implementing the business plan;
 3




---



##### Table of Contents




    
    our expectations as to future revenues, margins, expenses and capital requirements;
    
    our ability to raise additional cash from borrowings or other financings to fund
operations;
    
    our ability to maintain a viable cash and balance sheet position or to become cash
flow positive in our operations with additional funding;
    
    our ability to control costs and become profitable;
    
    our ability to generate revenues or positive cash flows;
    
    the composition of revenues and cost of sales, including operating margins and the
use of professional, consultancy and/or contractor services provided by third parties.
     
    
    our ability to obtain financing on acceptable terms and sufficiently to fund our
working capital requirements and business plan;
    
    our vulnerability to adverse general economic and industry conditions;
    
    the adverse effect of a highly competitive market for our products and services; and
    
    our ability to retain the services of key management personnel.
  4




---



##### Table of Contents



PART I
 
 ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
  
 ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
  
 ITEM 3. KEY INFORMATION
 Selected financial data
     5




---



##### Table of Contents



Successor
    
    Successor
    
    Successor
    
    
    PredecessorYear
    
    Year
    
    From June
    
    
    From
    
    Predecessor
    
    PredecessorEnded
    
    Ended
    
    7, 2002 to
    
    
    January 1,
    
    Year Ended
    
    Year EndedDecember
    
    December
    
    December
    
    
    2002 to June
    
    December
    
    December31,2004
    
    31, 2003
    
    31, 2002
    
    
    7, 2002
    
    31, 2001
    
    31, 2000Revenue:Communication services revenues
    
    
    26,962
    
    
    
    17,205
    
    
    
    2,793
    
    
    
    
    1,216
    
    
    
    240,092
    
    
    
    646,470Operations and maintenance fee revenue
    
    
    1,828
    
    
    
    1,707
    
    
    
    1,371
    
    
    
    
    1,451
    
    
    
    4,239
    
    
    
    4,455Capacity sales
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,298
    
    
    
    102,983Total revenue
    
    
    28,790
    
    
    
    18,912
    
    
    
    4,164
    
    
    
    
    2,667
    
    
    
    256,629
    
    
    
    753,908Operating expenses:Cost of services and sales
    
    
    (16,538
    )
    
    
    (10,015
    )
    
    
    (1,506
    )
    
    
    
    (1,518
    )
    
    
    (170,463
    )
    
    
    (552,110
    )Selling, general and administrative
(including non-cash stock compensation
(income) / expense of $(49), $(27), $75
(Successor), $4,567 (Predecessor), 2001
- $(5,819)
    
    
    (67,797
    )
    
    
    (51,225
    )
    
    
    (30,840
    )
    
    
    
    (26,502
    )
    
    
    (115,245
    )
    
    
    (358,729)
    )Gain on amounts due from bankruptcy
estates
    
    
    3,105
    
    
    
    358
    
    
    
    25,003
    
    
    
    
    
    
    
    
    
    
    
    
    Restructuring and impairment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (908
    )
    
    
    (1,278,640)
    )
    
    
    (899,999
    )Depreciation and amortization
    
    
    (9,140
    )
    
    
    (7,181
    )
    
    
    (2,458
    )
    
    
    
    (1,736
    )
    
    
    (119,920
    )
    
    
    (303,168
    )Total operating expenses (net)
    
    
    (90,370
    )
    
    
    (68,063
    )
    
    
    (9,801
    )
    
    
    
    (30,664
    )
    
    
    (1,684,268
    )
    
    
    (2,114,006
    )Other operating income
    
    
    17,780Operating loss before reorganization items
    
    
    (43,800
    )
    
    
    (49,151
    )
    
    
    (5,637
    )
    
    
    
    (27,997
    )
    
    
    (1,427,639
    )
    
    
    (1,360,098
    )Reorganization items
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,662,669
    
    
    
    
    
    
    
    Operating (loss) / income
    
    
    (43,800
    )
    
    
    (49,151
    )
    
    
    (5,637
    )
    
    
    
    2,634,672
    
    
    
    (1,427,639
    )
    
    
    (1,360,098
    )Other income / (expense):Interest and other income
    
    
    775
    
    
    
    1,557
    
    
    
    986
    
    
    
    
    1,007
    
    
    
    8,019
    
    
    
    31,981Interest expense
    
    
    (4,395
    )
    
    
    
    
    
    
    (11
    )
    
    
    
    (63
    )
    
    
    (83,965
    )
    
    
    (212,630
    )Net (loss) / income before taxation
    
    
    (47,420
    )
    
    
    (47,594
    )
    
    
    (4,662
    )
    
    
    
    2,635,616
    
    
    
    (1,503,585
    )
    
    
    (1,540,747
    )Taxation
    
    
    241
    
    
    
    217
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net (loss) / income
    
    
    (47,179
    )
    
    
    (47,377
    )
    
    
    (4,662
    )
    
    
    
    2,635,616
    
    
    
    (1,503,585
    )
    
    
    (1,540,747
    )Dividends on convertible preferred
securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,293
    )
    
    
    (32,954
    )Net (loss) / income attributable to common
stockholders
    
    
    (47,179
    )
    
    
    (47,377
    )
    
    
    (4,662
    )
    
    
    
    2,635,616
    
    
    
    (1,517,878
    )
    
    
    (1,573,701
    )Net (loss) / income per common share
attributable to common shareholders, basic
and diluted
    
    
    (4.42
    )
    
    
    (4.43
    )
    
    
    (0.44
    )
    
    
    
    51.72
    
    
    
    (29.72
    )
    
    
    (31.53
    )Weighted average common shares outstanding,
basic and diluted
    
    
    10,630
    
    
    
    10,730
    
    
    
    10,560
    
    
    
    
    50,963
    
    
    
    51,072
    
    
    
    49,905
 6




---



##### Table of Contents



Successor
    
    Successor
    
    
    PredecessorSuccessor
    
    Year
    
    From June
    
    
    From
    
    Predecessor
    
    PredecessorYear Ended
    
    Ended
    
    7, 2002 to
    
    
    January 1,
    
    Year Ended
    
    Year EndedDecember
    
    December
    
    December
    
    
    2002 to June
    
    December
    
    December31,2004
    
    31, 2003
    
    31, 2002
    
    
    7, 2002
    
    31, 2001
    
    31, 2000Other Consolidated Financial
Data:Net cash used in operating activities
    
    
    (48,824
    )
    
    
    (25,116
    )
    
    
    (13,765
    )
    
    
    
    (7,856
    )
    
    
    (219,854
    )
    
    
    (271,698
    )Net cash (used in)/ provided by
investing activities
    
    
    (3,847
    )
    
    
    (2,952
    )
    
    
    (1,667
    )
    
    
    
    (6,670
    )
    
    
    65,408
    
    
    
    (565,332
    )Net cash provided by /(used in)
financing activities
    
    
    44,158
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    (73,300
    )
    
    
    762,765
 Successor Company at December 31,
    
    
    Predecessor Company at December 31,2004
    
    2003
    
    2002
    
    
    2001
    
    2000Consolidated Balance Sheet Data:Cash and cash equivalents
    
    $
    22,820
    
    
    $
    30,378
    
    
    $
    53,408
    
    
    
    $
    65,933
    
    
    $
    305,293Restricted cash equivalents and
restricted marketable
securities, current and
non-current
    
    
    486
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    61,936Cash securing letters of credit
for network construction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29,728Other current assets
    
    
    18,008
    
    
    
    21,179
    
    
    
    22,766
    
    
    
    
    43,541
    
    
    
    239,890Property and equipment, net
    
    
    37,986
    
    
    
    39,899
    
    
    
    37,947
    
    
    
    
    30,774
    
    
    
    1,385,917Intangible assets, net
    
    
    2,198
    
    
    
    3,330
    
    
    
    
    
    
    
    
    61,865
    
    
    
    120,692Other assets
    
    
    7,630
    
    
    
    96
    
    
    
    6,930
    
    
    
    
    776
    
    
    
    11,931Total assets
    
    
    99,680
    
    
    
    94,882
    
    
    
    121,051
    
    
    
    
    202,889
    
    
    
    2,155,387Total current liabilities
    
    
    27,671
    
    
    
    33,115
    
    
    
    12,691
    
    
    
    
    2,411,059
    
    
    
    2,611,633Total long-term liabilities
    
    
    36,617
    
    
    
    304
    
    
    
    10,676
    
    
    
    
    
    
    
    
    91,860Series B mandatorily redeemable
(in 2015) cumulative convertible
preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    338,259
    
    
    
    328,616Predecessor-obligated
mandatorily redeemable (in 2015)
convertible preferred securities
of subsidiary grantor trust
whose sole assets are junior
subordinated debentures of
Predecessor
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    180,000Stockholders equity (deficiency)
    
    
    35,392
    
    
    
    61,463
    
    
    
    97,684
    
    
    
    
    (2,546,429
    )
    
    
    (1,056,722
    )
 Capitalization and indebtedness
  Reasons for the offer and use of proceeds
  7




---



##### Table of Contents



Risk Factors
  We cannot assure you that we will be able to fund our operations without further debt
financing, which may not be available on attractive terms or at all.
     - 8 -




---



##### Table of Contents



Our substantial level of debt may adversely affect our operations and financial conditions.
   
    
    limiting our ability to obtain additional financing for our capital
expenditures, acquisitions, working capital or other general requirements;
    
    limiting our flexibility in planning for, or reacting to, changes in our
business, the competitive environment and the telecommunications industry;
    
    placing us at a competitive disadvantage to competitors with less debt;
    
    making us more vulnerable to economic downturns, which could weaken our ability
to compete effectively and could reduce our flexibility in responding to changing
economic conditions; and
    
    limiting our ability to take advantage of new business opportunities.
 Our debt covenants limit our financing and other activities.
  
    
    incur indebtedness;
    
    make prepayments of certain indebtedness;
    
    pay dividends;
    
    make investments;
    
    engage in transactions with stockholders and affiliates;
    
    issue capital stock;
    
    create liens;
    
    sell assets;
 - 9 -




---



##### Table of Contents




    
    engage in mergers and consolidations;
    
    change the Chief Executive Officer; and
    
    increase the size of the Board.
  The Investors are holders of the Special Share which provides the Investors with approval
rights over material actions by the Company.
  We have a history of operating losses and expect these losses to continue.
  Our future operating results may be subject to significant fluctuation.
  
    
    our ability to raise additional financing;
    
    general economic conditions;
    
    the conditions of the European telecommunications industry in general;
 - 10 -




---



##### Table of Contents




    
    further price decreases in the European telecommunications industry;
    
    continuing overcapacity leading to a reduction in demand for, in
particular, our wholesale
products and services;
    
    our ability to introduce new products and services;
    
    our ability to attract and retain customers;
    
    our ability to operate and develop in new markets, in particular that for consumer
broadband and Voice over IP (VoIP);
    
    changes in the mix of services sold or channels through which services are sold;
    
    capital expenditure requirements and costs relating to our network;
    
    the outcome of legal proceedings; and
    
    the effects of government regulation and regulatory changes.
  We cannot assure you that we will be able to retain or find qualified replacements for members
of our senior management team and other key personnel.
  Our exposure to exchange rate fluctuations may have a material adverse effect on our ability
to meet certain obligations.
  - 11 -




---



##### Table of Contents



We are subject to risks associated with operating in multiple countries.
   We cannot assure you that we will be able to enter into sales contracts sufficient to meet our
working capital requirements.
  We cannot assure you that we will be able to retain or expand our existing customer base.
  We may not have the ability to support and develop new services and product lines.
  
    
    generate customer acceptance of such new services and product offerings;
    
    integrate necessary equipment and software into our network;
 - 12 -




---



##### Table of Contents




    
    enhance our billing, back-office and information systems required to accommodate
these new services and products; and
    
    identify and sell other services and products for which we believe there is a
significant potential demand.
  System disruptions or failures could have a material adverse effect on our business.
  
    
    fire and flood;
    
    power loss;
    
    natural disasters; and
    
    general transmission failures caused by a number of additional factors.
  Failure of key suppliers could affect our ability to operate our business.
  
    
    delays in new products and features from suppliers, impacting our product
development programs;
    
    discontinuance of products or services, impacting our ability to deliver our
products and services;
    
    deteriorating support quality, affecting operational and customer service; and
    
    higher volatility with regard to our demands on suppliers, and in stock levels
affected by customer returned equipment.
  - 13 -




---



##### Table of Contents



Electronic attack from hackers or computer viruses could disrupt our business.
  Rapid technological changes.
  The European telecommunications industry is highly competitive. Our market share, net sales
or net income could decline due to vigorous price and other competition.
   - 14 -




---



##### Table of Contents



Government regulation could adversely affect our ability to provide services in markets in
which we operate.
        - 15 -




---



##### Table of Contents



Changes in the regulation of Voice over IP could adversely affect our ability to meet some
obligations.
  Because we are a Bermuda holding company and a foreign private issuer for purposes of U.S.
securities laws, persons who own our common shares may have more difficulty in protecting their
interests than persons who are shareholders of a U.S. corporation.
    - 16 -




---



##### Table of Contents



We cannot assure you that an active trading market will develop or continue for our common
shares.
  The conversion, or even the prospect of conversion, of our convertible debt securities could
have a depressive effect on the trading activity of our common shares.
     We cannot assure you that you will receive dividends on our common shares in the foreseeable
future.
  - 17 -




---



##### Table of Contents



Our reputation may be adversely impacted by the Predecessors bankruptcy proceeding.
  The Company may have potential liability with respect to past non-compliance of the Predecessor
under the Exchange Act.
  Some members of our Board of Directors may have conflicts of interest with us, and some of
these conflicts may be resolved in a manner adverse to us.
  
 ITEM 4. INFORMATION ON THE COMPANY
 Business Overview  New Viatel Organization
   - 18 -




---



##### Table of Contents



- 19 -




---



##### Table of Contents



History of the Predecessor
    - 20 -




---



##### Table of Contents



Chapter 11 Reorganization
  Operations of the Predecessor as at the Filing Date
    - 21 -




---



##### Table of Contents



Capital Structure of Predecessor as at the Filing Date
   Asset/network disposals following the Filing Date
   - 22 -




---



##### Table of Contents



Plan of Reorganization
        - 23 -




---



##### Table of Contents



Class description
    
    Treatment under the Plan of ReorganizationClass 1  Other Priority Claims
    
    UnimpairedClass 2  Convenience Claims
(Unsecured Claims of Face Amount
US$500 or less, excluding any
Intercompany Claims)
    
    UnimpairedClass 3.01  NTFC Secured Claim
    
    UnimpairedClass 3.02  Other Secured Claims
    
    UnimpairedClass 4  General Unsecured Claims
    
    Pro rata share of 88% of 12,000,000 new
common shares of the Company of US$0.01
each, issued in connection with the Plan
of ReorganizationClass 5  Intercompany Claims
    
    ExtinguishedClass 6  Interests
    
    Cancelled
  Emergence from Chapter 11
 Operations of the Company as at June 7, 2002
   
    
    the European Network;
 
    
    leased capacity to a POP in New York;
 
    
    several inoperative voice switches; and
 
    
    certain receivables and cash-in-hand of the Predecessor.
 - 24 -




---



##### Table of Contents



Evolution of operations of Viatel from June 7, 2002 until May 2003
    New Viatel Business Plan
  Development of the New Viatel Business Plan
  - 25 -




---



##### Table of Contents



Retail
  
    
    Managed IP VPN: Launched in June 2004, this is a managed solution offering a
virtual private network, providing a secure, cost effective communications network
between a customers different sites, remote workers and its business partners.
    
    Bonded Broadband: Launched in June 2004, this managed service bonds together
standard broadband lines into a high-speed service that aggregates bandwidth and
offers a competitive alternative to a traditional leased line service.
    
    Ethernet: Launched in November 2004, this is a high performance national and
international connectivity product using a standard local area network (LAN)
interface common to most businesses, the key advantages being increased
flexibility, scalability and cost-effectiveness.
    
    VoIP: Launched in May 2005, this is a replacement product for traditional voice
services which use the public switched telephone network (PSTN). The product
allows the
 - 26 -




---



##### Table of Contents



elimination of traditional circuit activity associated with the PSTN and
offers the customer substantial cost savings.
 x
   
    
    Enterprise Business Broadband: an xDSL broadband service, with high performance
and reliability, designed for the business user. This service is based on a 1-to-1
contention ratio (contention being defined as the number of organizations sharing
the same bandwidth); in this way, the customer has effectively its own dedicated
bandwidth, maximising service performance.
    
    SoHo Business Broadband: an xDSL shared broadband service aimed at small offices
and people working from home.
    
    Dedicated Internet Access: a high bandwidth leased line Internet access
utilising our IP Network and worldwide peering agreements.
  
    
    Co-location: a managed service offering a flexible and cost-effective
alternative to an in-house Internet facility. Dedicated full and half racks are
available and located in highly secure and monitored (on a 24 hour, 7 days a week
basis) facility.
    
    Managed Hosting: a service available on RedHat, Linux and Windows operating
systems. This service is a managed, dedicated web and Internet applications hosting
solution for business customers. Such applications could be a web site, an
e-business platform or an SAP application. This service is again located in a
highly secure and monitored (on a 24 hour, 7 days a week basis) facility.
  
    
    Managed Firewall: a fully managed and dedicated firewall solution. A firewall is
a set of hardware and software components used for the protection of a network from
unauthorised access. Firewalls might be located in the customers premises for DIA
and broadband connectivity or in Viatels data centre for managed hosting
customers.
    
    Managed Anti Spam & Anti Virus: an e-mail scanning service based on a three tier
architecture that blocks spam and viruses transmitted over the Internet before
reaching the customer network.
 - 27 -




---



##### Table of Contents




    
    Site-to-Site IPVPN: an IPVPN service that allows customers to access private
data, such as company information, across a public or shared network. The Viatel
IPVPN offering takes advantage of a number of access technologies, such as dial,
broadband and DIA. IPSec is currently the security protocol used by Viatel.
    
    Remote IPVPN: a service that allows customers with a distributed workforce to
access company data and systems, such as order entry and work-flow management. An
international roaming service option is also available.
    
    Viatel Managed IPVPN: a secure, cost effective communication service between
customer sites, remote workers and business partners over a shared network. If
customers wish to manage their own site equipment, they can choose a wires only
option.
    
    Viatel Ethernet: a high bandwidth, flexible service to enable customers to run
data intensive or real time applications between their sites.
  
    
    Viatel VoIP: comparable to a traditional voice access line service, but routed
over cost effective Internet connections such as broadband and leased lines. We
provide the Internet connection and a variety of gateways to IP enabled existing
customer equipment. Viatel hosted VoIP provides a fully managed, bundled telephony
solution, including IP enabled
phones, connectivity and private branch exchange PBX functionality such as call
forwarding and voice mail.
    
    Viatel VoIP VPN: a single, secure VPN network for integrated voice and data
traffic between customer sites and remote workers, helping to reduce costs and
improve efficiency.
  Cybernet
   
    
    VPN Connect: an MPLS VPN service with ADSL connections;
 - 28 -




---



##### Table of Contents




    
    Videoconferencing: providing a voice, video and file shared conferencing
platform enabling the customer to conduct on-line conferencing;
    
    A white label web hosting product: enabling wholesale partners to take space
on the shared Cybernet hosting platform with a view to offering their own web
hosting product; and
    
    Ethernet Connect: a 2Mb leased line with an Ethernet service, offering
connectivity between over 200 Swiss towns.
   Wholesale
   
    
    Leased Line: an end-to-end, managed, fully redundant and protected synchronous
digital hierarchy (SDH) transmission technology international private wire
service, over varying speeds, that uses the European Network.
    
    Wavelength: a service offering greater speed, flexibility and more efficient
bandwidth utilization allowing carriers, ISPs and large corporate customers,
effectively, to design and operate their own networks.
    
    IP transit: services where, starting with our own networks IP backbone and
then, by purchasing global IP transit from a number of carefully selected partners,
we are able to offer our customers the best available connection routes, thus
providing our customers with maximum quality, responsiveness and cost-
effectiveness.
  
    
    Dark Fiber: we offer dark fiber to customers that may wish to make the requisite
capital investments in order to carry traffic over fiber; however, we do not expect
that there will be an active market for dark fiber in the near future. We may also
make available to our customers, in selected locations and facilities, certain
ducts on either an outright sale or leased basis.
    
    Co-location: services normally provided as ancillary to the aforementioned
connectivity and IP transit services. These services allow our customers, who
connect directly to our
 - 29 -




---



##### Table of Contents



network, to install and operate their equipment in our
co-location facilities. A range of add-on services are also offered such as
dedicated racks and secure cages designed to allow increased security and remote
monitoring of customers applications co-located at the facility.
  VISP
    Sales and Marketing
   Segmental Revenue
  - 30 -




---



##### Table of Contents



Successor
    
    
    Successor
    
    
    Successor
    
    
    
    PredecessorYear ended
    
    
    Year ended
    
    
    From June 7,
    
    
    
    From JanuaryDecember 31,
    
    
    December 31,
    
    
    2002 to December
    
    
    
    1, 2002 to JuneUS$000
    
    2004
    
    
    2003
    
    
    31, 2002
    
    
    
    7, 2002United Kingdom
    
    
    10,560
    
    
    
    7,998
    
    
    
    1,497
    
    
    
    
    Switzerland
    
    
    15,188
    
    
    
    9,041
    
    
    
    
    
    
    
    
    Western Europe
    
    
    2,366
    
    
    
    397
    
    
    
    531
    
    
    
    
    North America
    
    
    676
    
    
    
    1,476
    
    
    
    2,136
    
    
    
    
    366Consolidated
    
    
    28,790
    
    
    
    18,912
    
    
    
    4,164
    
    
    
    
    2,667
  The European Network
     - 31 -




---



##### Table of Contents



Competition
  - 32 -




---



##### Table of Contents



Description of Certain Indebtedness
  April 2004 Financing
    Investor
    
    Notes (US$)(1) Morgan Stanley
    
    
    36,000,000(2) Ahab Partners, L.P.
    
    
    3,000,000(3) Wayland Distressed Opportunities Fund I-A, LLC
    
    
    500,000(4) Värde
    
    
    10,000,000(5) Sapphire Special Opportunities Fund, LLC.
    
    
    500,000
 - 33 -




---



##### Table of Contents



Investor
    
    Notes (US$)(6) Stonehill Institutional Partners, L.P.
    
    
    1,000,000(7) Ore Hill Hub Fund Ltd
    
    
    1,000,000(8) Lucy Woods
    
    
    250,000Total
    
    
    52,250,000
  Investor
    
    Notes (US$)(1) Morgan Stanley
    
    
    35,650,000(2) Ahab Partners, L.P.
    
    
    3,000,000(3) Wayland Distressed Opportunities Fund I-A, LLC
    
    
    500,000(4) Värde
    
    
    10,000,000(5) Sapphire Special Opportunities Fund, LLC.
    
    
    500,000(6) Stonehill Institutional Partners, L.P.
    
    
    1,000,000(7) Ore Hill Hub Fund Ltd
    
    
    1,000,000(8) Lucy Woods
    
    
    250,000(9) John Colton
    
    
    250,000(10) Francis Williams
    
    
    100,000Total
    
    
    52,250,000
 - 34 -




---



##### Table of Contents



Investor
    
    Notes (US$)(1) Morgan Stanley
    
    
    2,118,085.34(2) Ahab Partners, L.P.
    
    
    190,081.72(3) Wayland Distressed Opportunities Fund I-A, LLC
    
    
    29,706.66(4) Värde
    
    
    594,133.34(5) Sapphire Special Opportunities Fund, LLC.
    
    
    29,706.66(6) Stonehill Institutional Partners, L.P.
    
    
    59,413.34(7) Ore Hill Hub Fund Ltd
    
    
    59,413.34(8) Lucy Woods
    
    
    14,853.34(9) John Colton
    
    
    6,394.96(10) Francis Williams
    
    
    2,557.99Total
    
    
    3,104,346.69
     - 35 -




---



##### Table of Contents



June 2005 Financing and the Proposed Further Financing
   pari passu
  - 36 -




---



##### Table of Contents



Regulation
     - 37 -




---



##### Table of Contents



Autorité de Regulation des
Télécommunications Regulierungsbehörde für Telekommunikation und Post Onafhankelijke Post en Telecommunicatie Autoriteit
 Organizational Structure
  Ownership by Viatel HoldingName of Subsidiary
    
    Jurisdiction of Incorporation
    
    (Bermuda) LimitedVTL-TP (Bermuda) Limited
    
    Bermuda
    
    
    100
    %Viatel Holding (Europe) Limited
    
    England and Wales
    
    
    100
    %Viatel Operations SA(1)
    
    France
    
    
    100
    %Viatel Belgium NV
    
    Belgium
    
    
    100
    %VTL, Inc.(2)
    
    US
    
    
    100
    %Viatel Broadband Limited
    
    England and Wales
    
    
    100
    %
 Name of Subsidiary
    
    Jurisdiction of Incorporation
    
    Ownership by VTL, Inc.Viatel Belgium Limited
    
    England and Wales
    
    
    100
    %VTL (UK) Limited
    
    England and Wales
    
    
    100
    %Viatel Circe Assets Limited
    
    England and Wales
    
    
    100
    %
 Ownership by Viatel HoldingName of Subsidiary
    
    Jurisdiction of Incorporation
    
    (Europe) LimitedViatel Equipment Limited
    
    England and Wales
    
    
    100
    %Viaphone AG
    
    Switzerland
    
    
    100
    %Cybernet (Schweiz) AG
    
    Switzerland
    
    
    100
    %Viatel Global Communications B.V.
    
    The Netherlands
    
    
    100
    %Viatel German Asset GmbH
    
    Germany
    
    
    100
    %VTL Telecom GmbH
    
    Germany
    
    
    100
    %
 - 38 -




---



##### Table of Contents



Ownership by VTL (UK)Name of Subsidiary
    
    Jurisdiction of Incorporation
    
    LimitedViatel Internet Limited
    
    England and Wales
    
    
    100
    %
 Ownership by Viatel GlobalName of Subsidiary
    
    Jurisdiction of Incorporation
    
    Communications B.V.Viafoperations Communications B.V.
    
    The Netherlands
    
    
    100
    %
 
 société anonyme
    Property, Plant and Equipment
     - 39 -




---



##### Table of Contents



Total Equipment or Facility AreaProperty name
    
    Site Type
    
    (leased total area may be larger)ESSEN (BELGIUM)
    
    REGEN
    
    25 sqmLEERS-NORD
    
    REGEN
    
    25 sqmLIEGE
    
    REGEN
    
    25 sqmANTWERP WOMMELGEN
    
    MOR
    
    25 sqmHASSELT
    
    REGEN
    
    25 sqmANTWERP BELIEWEG (ALASKA)
    
    MOR
    
    25 sqmGENT (MERELBEKE)
    
    MOR
    
    25 sqmGENT (BRUGGE)
    
    REGEN
    
    25 sqmLEUVEN
    
    REGEN
    
    200 sqmESTAMPUIS
    
    MOR
    
    25 sqmTOURNAI
    
    REGEN
    
    25 sqmMONS
    
    REGEN
    
    25 sqmCHARLEROI (CHATELET)
    
    REGEN
    
    25 sqmANTWERP VOSVELD 20
    
    Storage (Future POP)
    
    178 sqm offices  1237 sqm techBRUSSELS MIDI (RUE DE France)
    
    POP
    
    95 sqmANTOING
    
    REGEN
    
    25 sqmNAMUR
    
    REGEN
    
    25 sqmBRUSSELS TOLL-LAAN
    
    POP/OFFICE
    
    480 sqm + 220 sqmKORTRIJK
    
    REGEN
    
    25 sqmAVIGNONET (LAURAGAIS)
    
    MOR
    
    25 sqmPARIS AUBERVILLERS CEDEX (VICTOR-HUGO)
    
    RACK SPACE
    
    room 12, 1 rackAVAILLES-EN-CHATERELLAULT
    
    MINI-POP
    
    25 sqmLYON (RUE GEORGE MARANNE) 2
    
    POP
    
    16 sqmLISLE ADAM (MOURS) (A16)
    
    MOR
    
    25 sqmPARIS AUBERVILLIERS CEDEX (GARDINOUX)
    
    POP
    
    1 600 x 600 rack
 - 40 -




---



##### Table of Contents



Total Equipment or Facility AreaProperty name
    
    Site Type
    
    (leased total area may be larger)AZY-SUR-MARNE (NOGENT LARTAND)
    
    MOR
    
    25 sqmMEAUX
    
    MOR
    
    25 sqmBORDEAUX (MERIGNAC)
    
    POP
    
    1267 sqmCAYEUX-SUR-MER
    
    REGEN
    
    800 sqmCAZAN (VERMEGUES)
    
    MOR
    
    25 sqmCHAROLLES (LP2) (VENDENESSE)
    
    MOR
    
    25 sqmCONDE-SUR-MARNE
    
    REGEN
    
    25 sqmCORBEIL (ESSONNES) (LP7)
    
    MOR
    
    25 sqmCOURRIERES
    
    MOR
    
    25 sqmBIACHES (PERONNE) #1
    
    REGEN
    
    25 sqmBOURBON (LP3)
    
    MOR
    
    25 sqmBELLEVILLE (LP1) (MONTMERLE)
    
    MOR
    
    25 sqmBON-ENCONTRE
    
    MOR
    
    25 sqmFOS-SUR-MER
    
    MOR
    
    25 sqmBLOIS
    
    MOR
    
    25 sqmGRISOLLES
    
    MOR
    
    25 sqmBLANZAY
    
    MOR
    
    25 sqmMEILHAN SUR GARONNE
    
    MOR
    
    25 sqmLAVOURS (LG2)
    
    MOR
    
    25 sqmBRIARE (LP5)
    
    REGEN
    
    25 sqmST MARTIN-DE-BRETHENCOURT
    
    MOR
    
    25 sqmTHOUROTTE
    
    MOR
    
    25 sqmSOUPPES-SUR-LOING (LP6)
    
    MOR
    
    25 sqmPICHEGU (ST GILES) (MARNEGA)
    
    MOR
    
    25 sqmPARIS LA DEFENSE (COURBEVOIE)
    
    POP
    
    415 sqmPOILHES
    
    MOR
    
    25 sqmPARIS SAINT DENIS
    
    POP
    
    3,716 sqmMONTFAUCON (CADEROUSSE)
    
    REGEN
    
    25 sqmTOULOUSE
    
    POP
    
    816 sqm
 - 41 -




---



##### Table of Contents



Total Equipment or Facility AreaProperty name
    
    Site Type
    
    (leased total area may be larger)ARTENAY (ORLEANS)
    
    POP
    
    25 sqmREVIGNY-SUR-ORNAIN (CONTRISSON)
    
    MOR
    
    25 sqmSAULT BRENAZ (LG1)
    
    MOR
    
    25 sqmSETE (MONTPELLIER)
    
    REGEN
    
    25 sqmAMIENS (PARC DACTIVITIES)
    
    POP
    
    750 sqm warehouse + 100 sqm
office + 5 car parksST CHRISTOPHE-DE-DOUBLE
    
    MOR
    
    25 sqmSTRASBOURG
    
    POP
    
    781 sqmNEVERS (LP4)
    
    MOR
    
    25 sqmMONTELIMAR (SAULCE SUR RHONE)
    
    MOR
    
    25 sqmMARSEILLE (4 RUE LEON GOZIAN)
    
    POP
    
    750 sqmMARSEILLETTE
    
    MOR
    
    25 sqmXOUAXANGE (HESSE)
    
    MOR
    
    500 sqmNANCY RUE JAURES
    
    POP
    
    705 sqmNAMBSHEIM (BS1)
    
    MOR
    
    25 sqmNERSAC
    
    MOR
    
    25 sqmPARIS 35 RUE DES JEUNEURS  BASEMENT
(BASTILLE)
    
    POP
    
    97 sqmANDANCETTE
    
    MOR
    
    25 sqmPARIS 35 RUE DES JEUNEURS  2ND
FLR (BASTILLE)
    
    POP/OFFICE
    
    327 sqmVERETZ (TOURS)
    
    MINI-POP
    
    25 sqmPARIS 38 RUE DES JEUNEURS  4TH
FLR
    
    POP
    
    7 RACKSPARIS 35 RUE DES JEUNEURS  3RD
FLR (BASTILLE)
    
    POP/OFFICE
    
    330 sqmTROUSSEY (VILLOROY SUR MEHOLLE)
    
    MOR
    
    25 sqmDUSSELDORF IN DER STEELE 29
    
    POP
    
    1 600 x 800 CabinetDERNBACH
    
    MOR
    
    25 sqmDUSSELDORF HALLE
    
    POP
    
    1400 sqm equipment room plus office
 - 42 -




---



##### Table of Contents



Total Equipment or Facility AreaProperty name
    
    Site Type
    
    (leased total area may be larger)CONNECTAPARKELTEN
    
    MOR
    
    25 sqmMANNHEIM
    
    POP
    
    1119 sqmNAUROD
    
    MOR
    
    25 sqmLINZ
    
    REGEN
    
    25 sqmFRANKFURT 19 WEISSMULLERSTRASSE
    
    POP
    
    1 600 x 800 CabinetBERG LANGWIESE (GASLINE)
    
    MOR
    
    25 sqmKAPPELLA (KAPPELLEN)
    
    MOR
    
    25 sqmPORZ
    
    MOR
    
    25 sqmFRANKFURT 90 KLEYERSTRASSE
    
    MINI-POP/OFFICE
    
    75 sqmAMSTERDAM SCHIPLUIDENLAAN (DELFLANDLAAN)
    
    POP/OFFICE/NOC
    
    695 sqm, 7 car park spaces (basement)AMSTERDAM NIKHEF BUILDING
    
    POP
    
    1 rackAMSTERDAM WORLD TRADE CENTRE
    
    POP/OFFICE
    
    182 sqmAMSTERDAM HALFWEG
    
    POP
    
    1728 sqmAMSTERDAM 144 GYROKOOPWEG
    
    POP
    
    3 racksAMSTERDAM 58 GYROKOOPWEG (INTERXION)
    
    POP
    
    1 rackZANDVOORT
    
    REGEN
    
    342 sqmLEERSUM
    
    MOR
    
    25 sqmROTTERDAM ALBERT PLESMANWEG (SOERWEG 5B)
    
    POP
    
    365 sqmWORLD FASHION CENTER (17th floor)
    
    Roof site
    
    100 sqm on siteDOORN
    
    MOR
    
    25 sqmOLTEN
    
    MOR
    
    50 sqmBASEL
    
    POP
    
    4 racksBERN
    
    POP
    
    50 sqmEPENDES
    
    REGEN
    
    100 sqmZURICH 225 JOSEF STR
    
    POP
    
    2 racks
 - 43 -




---



##### Table of Contents



Total Equipment or Facility AreaProperty name
    
    Site Type
    
    (leased total area may be larger)ZURICH 569 BADENEERSTRASSE
    
    POP
    
    810 sqmZURICH 560 SCHAFFHAUSERSTRASSE
    
    POP/OFFICE
    
    65 sqmGENEVA
    
    POP
    
    77 sqmGENEVA (Rue de la Confederation 6)
    
    POP
    
    1 rackLONDON PARK STREET
    
    POP
    
    25 sqmSNOW HILL
    
    MOR
    
    25 sqmPOLEGATE
    
    REGEN
    
    80 sqm (equipment room)PEASE POTTAGE
    
    MOR
    
    77 sqmPAKENHAM
    
    MOR
    
    25 sqmMANCHESTER WILLIAMS HOUSE
    
    POP
    
    1 rackLONDON TELEHOUSE NORTH
    
    POP/OFFICE
    
    243 sqm (2600 sq ft)LONDON GLOBAL SWITCH
    
    POP
    
    1 rack 1 ductEGHAM BLAYS BASEMENT
    
    WAREHOUSE
    
    257 sqmEGHAM INBUCON HOUSE
    
    POP/OFFICE/NOC
    
    1405 sqmLONDON 8 HARBOUR EXCHANGE (TELECITY 2)
    
    POP
    
    1 rack  ref 1 Z 18LONDON TELEHOUSE NORTH (NETCOM)
    
    POP
    
    3 racksLONDON BRICK LANE (INTERXION)
    
    POP
    
    1 x 600 x 600 rackLONDON TELEHOUSE EAST
    
    POP
    
    3 racksLONDON HOSTING CENTRE (PSINET)
    
    POP
    
    3 racksLOWESTOFT
    
    REGEN
    
    25 sqmBRACKNELL
    
    OFFICE/POP
    
    2,240 sqmLONDON 7 HARBOUR EXCHANGE (REDBUS)
    
    POP
    
    1 rack 8th floorLONDON BONNINGTON HOUSE (TELECITY 1)
    
    POP
    
    4 racksNEW YORK 60 HUDSON
    
    POP
    
    550 sqmFIBERNET BIRMINGHAM
    
    POP
    
    rack E11 (60cm x 60 cm)FIBERNET COVENTRY
    
    POP
    
    rack A10
 - 44 -




---



##### Table of Contents



Total Equipment or Facility AreaProperty name
    
    Site Type
    
    (leased total area may be larger)FIBERNET LEEDS 2
    
    POP
    
    rack D11FIBERNET LEICESTER
    
    POP
    
    rack B10FIBERNET READING
    
    POP
    
    rack D5FIBERNET EDINBURGH
    
    POP
    
    1 rackLEEDS (FOUNDRY STREET)
    
    OFFICE
    
    479 Sq FtLONDON GOSWELL ROAD
    
    POP
    
    1 rack
  
 ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
 The following discussion should be read in conjunction with our financial statements and the
notes thereto included elsewhere in this Form 20-F . The following discussion includes certain
forward-looking statements. See Forward Looking Statements on page 2. For a discussion of
important factors, see Item 3. Key Information  Risk Factors.
 General
     - 45 -




---



##### Table of Contents



Critical Accounting Policies and Estimates
   Fresh Start Reporting
   
    
    the reorganization value of the entity should be allocated to the entitys assets in
conformity with the procedures specified by Statement of Financial Accounting Standards
No. 141, Business Combinations (SFAS No. 141) for transactions reported on the
basis of the purchase method; and
    
    each liability existing as at the Effective Date, other than deferred taxes, should
be stated at present values of amounts to be paid determined at appropriate current
interest rates.
   - 46 -




---



##### Table of Contents



Revenue and Cost of Sales
     Impairment of Long-lived Assets
 
 
 
  
 
  
 - 47 -




---



##### Table of Contents




    Where a measurable trend has been established, cash inflows from existing services are
forecast based upon historical performance along with monthly growth rates in line with
those achieved over prior periods for which relevant data is available;
    Where a measurable trend has not been established, estimates of future inflows are based
on current recurring revenues and the order pipeline relevant to the assets;
    Cash inflows from new services or the other sales channels described in connection with
the New Viatel Business Plan (see Item 4. Information on the Company. New Viatel Business
Plan) are forecast based on good faith estimates of sales order value. In addition, alternative
customer profiles are modeled to test the level of assumed revenues for reasonableness in the absence
of historic market data;
    Estimates of cash outflows relating to costs are typically based on current run rates;
    Additional staff costs are included where additional sales heads or other staff
resources are required to meet revenue targets;
    Estimates of cost reductions are based on reasonable assessment and, where indicated,
based on third party professional advice; and
    Cash flows associated with future capital expenditure that would increase the service
potential of the relevant asset or group of assets are excluded.
 
  
 
  
 - 48 -




---



##### Table of Contents




    An agreement with a third party whereby the Company would enter into a structured
transaction in respect of certain parts of the Network, under which the Company would
receive cash inflows from the third party in respect of the Network assets, such cash
inflows representing a proportion of the tax benefits realised by the third party. The
benefits attributable to such transaction are supported by draft heads of terms and
independent advice from a major accountancy firm.
    A significant reduction in future costs relating to ROW charges in France, based on the
projected outcome of current litigation regarding such charges. See Item 8. Financial
Information on the Company. Legal Proceedings;
    Cessation of rental payments in relation to a property in Paris, France arising out of a
lease termination which is currently the subject of litigation. See Item 8. Financial
Information on the Company. Legal Proceedings; and
    Rent reductions in relation to certain property leased by the Company in the United
Kingdom.
 
  
 
  
 
  
 
    The Company may be unable to obtain further debt financing from its Investors or other
third parties. While management consider the expectations of such funding to be reasonable
at this time, any absence of such continued financial support would likely prevent the
Company from being able to generate the forecast cash flows, inevitably leading to an
impairment in the carrying value of the Network;
    A further deterioration in conditions within the European telecommunications market
which could adversely impact assumptions used in cash flow calculations;
 
  
 Accounting for loan notes
  - 49 -




---



##### Table of Contents



Results of Operations
  
  
 - 50 -




---



##### Table of Contents



Successor
    
    
    PredecessorJun. 7Year Ended December
    
    Year Ended
    
    Dec. 31,
    
    
    
    Jan.1Jun.
    
    Total Calendar Year Ended31, 2004
    
    December 31, 2003
    
    2002
    
    
    
    7, 2002
    
    December 31, 2002(1)% of
    
    
    
    
    
    % of$000
    
    revenue
    
    $000
    
    revenue
    
    $000
    
    
    $000
    
    $000
    
    % of revenueRevenue
    
    
    28,790
    
    
    
    100
    
    
    
    18,912
    
    
    
    100
    
    
    
    4,164
    
    
    
    
    2,667
    
    
    
    6,831
    
    
    
    100Cost of service & sales
    
    
    (16,538
    )
    
    
    (57
    )
    
    
    (10,015
    )
    
    
    (53
    )
    
    
    (1,506
    )
    
    
    
    (1,518
    )
    
    
    (3,024
    )
    
    
    (44
    )Selling, general &
administrative
    
    
    (67,797
    )
    
    
    (235
    )
    
    
    (51,225
    )
    
    
    (271
    )
    
    
    (30,840
    )
    
    
    
    (26,502
    )
    
    
    (57,342
    )
    
    
    (839
    )Gains on amounts due from
bankruptcy estates
    
    
    3,105
    
    
    
    11
    
    
    
    358
    
    
    
    2
    
    
    
    25,003
    
    
    
    
    
    
    
    
    N/A
    
    
    
    N/ARestructuring and impairment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (908)
    
    
    
    (908)
    
    
    
    (13
    )Depreciation and amortization
    
    
    (9,140
    )
    
    
    (32
    )
    
    
    (7,181
    )
    
    
    (38
    )
    
    
    (2,458
    )
    
    
    
    (1,736
    )
    
    
    (4,194
    )
    
    
    (61
    )Other operating income
    
    
    17,780
    
    
    
    62
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating loss before
reorganization items
    
    
    (43,800
    )
    
    
    (91
    )
    
    
    (49,151
    )
    
    
    (260
    )
    
    
    (5,637
    )
    
    
    
    (27,997
    )
    
    
    N/A
    
    
    
    N/AReorganization items
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,662,669
    
    
    
    N/A
    
    
    
    N/AOperating (loss) / income
    
    
    (43,800
    )
    
    
    (152
    )
    
    
    (49,151
    )
    
    
    (260
    )
    
    
    (5,637
    )
    
    
    
    2,634,672
    
    
    
    N/A
    
    
    
    N/AInterest and other income
    
    
    775
    
    
    
    3
    
    
    
    1,557
    
    
    
    8
    
    
    
    986
    
    
    
    
    1,007
    
    
    
    1,993
    
    
    
    29Interest expense
    
    
    (4,395
    )
    
    
    (15
    )
    
    
    
    
    
    
    
    
    
    
    (11
    )
    
    
    
    (63
    )
    
    
    (74
    )
    
    
    (1
    )Taxation
    
    
    241
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    N/ANet (loss) / income
    
    
    (47,179
    )
    
    
    (164
    )
    
    
    (47,377
    )
    
    
    (251
    )
    
    
    (4,662
    )
    
    
    
    2,635,616
    
    
    
    N/A
 
 (1)
    
    where not affected by adoption of fresh start reporting.
 Foreign Currency
   Inflation
  - 51 -




---



##### Table of Contents



Results of Operations for the year ended December 31, 2004 as compared with the year ended December
31, 2003
  Revenue
        Cost of Sales
   - 52 -




---



##### Table of Contents



Selling, General and Administrative Expenses
    Gains on amounts due from bankruptcy estates
   - 53 -




---



##### Table of Contents



Restructuring and Impairment
  Depreciation and Amortization
   Other operating income
  Operating loss
  Interest and Other Income
   Interest expense
  - 54 -




---



##### Table of Contents



Net loss
  Capital Expenditure
   Results of Operations for the year ended December 31, 2003 as compared with the year ended December
31, 2002
  Revenue
     - 55 -




---



##### Table of Contents



Cost of Sales
   Selling, General and Administrative Expenses
  Gains on amounts due from bankruptcy estates
   Restructuring and Impairment
  - 56 -




---



##### Table of Contents



Depreciation and Amortization
  Operating loss
  Interest and Other Income
   Net loss
  Capital Expenditure
  Liquidity and Capital Resources
  
  
 - 57 -




---



##### Table of Contents



pari passu
 
 
  
 
  
   - 58 -




---



##### Table of Contents



Commitments
  Contractual Obligations
 Less than
    
    
    
    
    
    
    
    
    
    
    More thanUS$000
    
    TOTAL
    
    
    1 year
    
    
    1-3 years
    
    
    3-5 years
    
    
    5 years(United States Dollars in thousands)Standby maintenance contracts
    
    
    3,730
    
    
    
    3,678
    
    
    
    52
    
    
    
    
    
    
    
    Operating leases
    
    
    39,930
    
    
    
    5,394
    
    
    
    7,771
    
    
    
    6,065
    
    
    
    20,700Loan and future interest payments
    
    
    94,812
    
    
    
    1,952
    
    
    
    12,774
    
    
    
    8,516
    
    
    
    71,570Total contractual cash commitments
    
    
    138,472
    
    
    
    11,024
    
    
    
    20,597
    
    
    
    14,581
    
    
    
    92,270
 
  
 
  
 Research and Development and Capital Expenditures
  Successor
    
    
    
    
    PredecessorYear ended
    
    Year ended
    
    From June 7, 2002
    
    
    From January 1,US$000
    
    December 31,
    
    December 31,
    
    to December 31,
    
    
    2002 to June 7,2004
    
    2003
    
    2002
    
    
    2002Capital expenditure
    
    3,847
    
    2,180
    
    1,667
    
    
    8,721Research and development
    
    1,093
    
    
    
    
    
    
    
 - 59 -




---



##### Table of Contents



Recent Accounting Pronouncements
    
 ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
 Directors and Executive Officers
  - 60 -




---



##### Table of Contents



Name
    
    Age
    
    Date of Appointment
    
    PositionLeslie Goodman
    
    
    59
    
    
    July 24, 2002
    
    Chairman of the Board (1), (2)Lucy Woods
    
    
    46
    
    
    May 9, 2003
    
    Chief Executive Officer and
Director (1)S. Dennis Belcher
    
    
    64
    
    
    August 8, 2002
    
    Director (1), (2), (3)Kevin Power
    
    
    51
    
    
    October 25, 2002
    
    Director (1), (2), (3)Edward Greenberg
    
    
    53
    
    
    March 31, 2003
    
    Director (3), (4)Thomas E. Doster IV
    
    
    36
    
    
    August 8, 2002
    
    Director (4)Steve Best
    
    
    38
    
    
    July 25, 2004
    
    Chief Technical OfficerStuart Blythe
    
    
    41
    
    
    September 29, 2003
    
    Senior Vice President and General
Counsel (5)Roberto Bonanzinga
    
    
    35
    
    
    September 15, 2003
    
    Senior Vice President, MarketingBrian McArthur
Muscroft
    
    
    41
    
    
    August 1, 2004
    
    Chief Financial Officer (5)
 
      Leslie Goodman.
 Lucy Woods.
 S. Dennis Belcher.
 - 61 -




---



##### Table of Contents



Kevin Power.
 Edward Greenberg.
 Thomas E. Doster IV.
 Steve Best.
 Stuart Blythe.
 Roberto Bonanzinga.
 Brian McArthur Muscroft.
 - 62 -




---



##### Table of Contents



Compensation
     Board Practices
 Board of Directors
  - 63 -




---



##### Table of Contents



Committees of the Board of Directors
    - 64 -




---



##### Table of Contents



Employees
  2004
    
    2003
    
    2002Engineering and Operations
    
    50
    
    41
    
    43Sales, Services and Marketing
    
    143
    
    105
    
    22Finance
    
    14
    
    15
    
    7Management Information Systems
    
    9
    
    5
    
    5Legal and Human Resources
    
    7
    
    2
    
    1Other
    
    2
    
    14
    
    5Total
    
    225
    
    182
    
    83
  May 31, 2005
    
    Total
    
    UK
    
    Belgium
    
    France
    
    Germany
    
    Netherlands
    
    SwitzerlandEngineering &
Operations
    
    48
    
    36
    
    1
    
    3
    
    1
    
    2
    
    5Sales, Services and
Marketing
    
    120
    
    90
    
    
    
    1
    
    1
    
    2
    
    26Finance
    
    13
    
    11
    
    
    
    1
    
    
    
    
    
    1Management
Information Systems
    
    8
    
    8
    
    
    
    
    
    
    
    
    
    Legal and Human
Resources
    
    7
    
    7
    
    
    
    
    
    
    
    
    
    Other
    
    2
    
    2
    
    
    
    
    
    
    
    
    
    Total
    
    198
    
    154
    
    1
    
    5
    
    2
    
    2
    
    32
 - 65 -




---



##### Table of Contents



Share Ownership
 Beneficial Ownership of Executive Officers and Directors
  
  
  Equity Incentive Plan and Employee Benefit Trust
    - 66 -




---



##### Table of Contents



ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
 Security Ownership of Certain Beneficial Owners
  - 67 -




---



##### Table of Contents



Amount and Nature of Beneficial
    
    Percentage ofName and Address of Beneficial Owner(1)
    
    Ownership(1)
    
    Outstanding Shares(2)Morgan Stanley & Co. Incorporated(3)
1585 Broadway, New York, NY 10036
    
    1,528,870 common shares
    
    14.4%Aspen Partners Series A(4)
c/o Aspen Advisors LLC

152 West 57th Street, New York, NY 10019
    
    1,499,018 common shares
    
    14.1%The Värde Fund L.P.(5)
8500 Normande Lake Blvd. #1570

Minneapolis MN 55437.
    
    882,531 common shares
    
    8.3 %Ramius Capital Group, LLC (6)
666 Third Avenue,
26th
Floor

New York, New York 10017

Citizenship (Cayman Islands)
    
    677, 871 common shares
    
    6.4%
 1.
    
    Beneficial ownership is determined in accordance with the rules of the U.S. SEC. In
computing the number of common shares beneficially owned by a person and the percentage
ownership of that person, common shares subject to options and warrants held by that person
that are currently exercisable or exercisable within 60 days are deemed outstanding. Such
common shares, however, are not deemed outstanding for the purpose of computing the percentage
ownership of any other person. Except as indicated in the footnotes to this table, the
shareholder named in the table has sole voting and investment power with respect to our common
shares set forth opposite such shareholders name.2.
    
    Based on 10,630,000 common shares outstanding as of May 31, 2005.3.
    
    Information based on the Schedule 13D/A, dated June 29, 2005, of Morgan Stanley. As a result
of the amendment of the Existing Notes under the terms of the Letter Agreement to make such
Existing Notes convertible upon the election of holders of a majority of the outstanding
principal amount of the Existing Notes (the Existing Notes Amendment), Morgan Stanley will
be deemed the beneficial owner of 54,117,503 shares (or 85.6% of the Companys outstanding
shares) comprised of (a) the 1,528,870 common shares directly owned by Morgan Stanley; (b)
47,533,333 common shares issuable upon conversion of $35,650,000 principal amount of Existing
Notes held by Morgan Stanley; and (c) 5,055,300 common shares issuable upon conversion of
$3,791,475 of additional Existing Notes representing accrued interest on the Existing Notes
held by Morgan Stanley, based on the lowest possible conversion price under the Existing Notes
of $0.75 per share. The exact number of common shares into which the Existing Notes are
convertible is not calculable at the present time because the conversion price used for such
conversion is based upon a calculation of the total equity value of the Company, to be
calculated at the time of conversion by the Board of Directors of the Company (subject to
approval of the majority noteholders). See Item. 4 Company Information  Description of
Certain Indebtedness).
 - 68 -




---



##### Table of Contents



4.
    
    Information based on the Schedule 13G, dated February 11, 2005, of Aspen Partners Series A,
Aspen Capital LLC, Aspen Advisors LLC and Nikos Hecht, as modified to reflect updated
movements in the register of members and beneficial ownership of our common shares since the
date of filing.5.
    
    Information based on the Schedule 13G, dated February 11, 2005, of The Värde Fund L.P., The
Värde Fund V L.P., The Värde Fund VI L.P., Värde Investment Partners L.P., The Värde Select
Fund L.P., The Värde Fund (Cayman) Limited, The Värde Fund V GP LLC, The Värde Fund VI GP LLC,
Värde Investment Partners GP LLC, Värde Partners L.P., Värde Partners Inc. and Värde
Management International Inc., George G. Hicks, Gregory S. McMillan, Marcia L. Page. The
address for The Värde Fund (Cayman) Limited is 2nd Floor Harbour Centre, P.O. Box 896, George
Town BWI. All other entities can be contacted at the address listed in the table. As a result
of the Existing Notes Amendment, Värde will be deemed the beneficial owner of 15,008,042
shares (or 58.5% of the Companys outstanding shares) comprised of (a) the 882,531 common
shares directly owned by Värde; (b) 13,333,333 common shares issuable upon conversion of $10.0
million principal amount of Existing Notes held by Värde; and (c) 792,178 common shares
issuable upon conversion of $594,133 of additional Existing Notes representing interest
payment on the Existing Notes held by Värde, based on the lowest possible conversion price
under the Existing Notes of $0.75 per share. The exact number of common shares into which the
Existing Notes are convertible is not calculable at the
present time because the conversion price used for such conversion is based upon a calculation
of the total equity value of the Company, to be calculated at the time of conversion by the
Board of Directors of the Company (subject to approval of the majority noteholders). See Item.
4 Company Information  Description of Certain Indebtedness).6.
    
    Information based on the Schedule 13G, dated February 11, 2005, of the RCG Carpathia Master
Fund Ltd (Cayman Islands), Ramius Securities LLC, Ramius Capital Group, LLC, RCG Carpathia
Master Fund Ltd, SphinX Distressed (RCG Carpathia) Segregated Portfolio, C4S & Co., LLC, Peter
A. Cohen, Morgan B. Stark, Thomas W. Strauss and Jeffrey M. Solomon, as modified to reflect
updated movements in the register of members and beneficial ownership of our common shares
since the date of filing.
 Related Party Transactions
   
  
 - 69 -




---



##### Table of Contents



ITEM 8. FINANCIAL INFORMATION
 Consolidated Statements and Other Financial Information
 Financial Statements
  Legal Proceedings
    - 70 -




---



##### Table of Contents



   
     
  
   
 
  - 71 -




---



##### Table of Contents




    Dividend Policy
  Significant Changes
  - 72 -




---



##### Table of Contents



ITEM 9. THE LISTING
 Listing Details
 The Predecessor
  High
    
    LowPeriod
    
    (in USD)Fiscal 1998
    
    
    23.50
    
    
    
    5.00Fiscal 1999
    
    
    57.50
    
    
    
    17.00Fiscal 2000
    
    
    75.38
    
    
    
    1.63First Quarter 2001
    
    
    5.75
    
    
    
    0.56Second Quarter 2001 (1)
    
    
    0.86
    
    
    
    0.06Third Quarter 2001 (2)
    
    
    0.06
    
    
    
    0.03Fourth Quarter 2001
    
    
    N/A
    
    
    
    N/AFiscal 2002
    
    
    N/A
    
    
    
    N/A
 
 (1)
    
    On May 2, 2001, the Nasdaq National Market suspended trading of the common stock of
the Predecessor.(2)
    
    In July 2001, the Nasdaq National Market delisted the common stock of the Predecessor. The Successor
   High
    
    LowPeriod
    
    (in USD)Fourth Quarter 2002
    
    
    N/A
    
    
    
    N/AFirst Quarter 2003
    
    
    1.35
    
    
    
    1.10Second Quarter 2003
    
    
    1.35
    
    
    
    0.50Third Quarter 2003
    
    
    4.25
    
    
    
    0.50Fourth Quarter 2003
    
    
    8.00
    
    
    
    0.50First Quarter 2004
    
    
    2.75
    
    
    
    0.75
 - 73 -




---



##### Table of Contents



High
    
    LowPeriod
    
    (in USD)Second Quarter 2004
    
    
    1.90
    
    
    
    0.90July 2004
    
    
    1.20
    
    
    
    0.90August 2004
    
    
    0.92
    
    
    
    0.70September 2004
    
    
    0.90
    
    
    
    0.60October 2004
    
    
    0.95
    
    
    
    0.60November 2004
    
    
    1.05
    
    
    
    0.85December 2004
    
    
    1.50
    
    
    
    0.90January 2005
    
    
    0.96
    
    
    
    0.75February 2005
    
    
    0.95
    
    
    
    0.75March 2005
    
    
    0.95
    
    
    
    0.60April 2005
    
    
    0.75
    
    
    
    0.20May 2005
    
    
    0.30
    
    
    
    0.07June 2005 (through June 16, 2005)
    
    
    0.10
    
    
    
    0.07
  Markets
  
 ITEM 10. ADDITIONAL INFORMATION
 Description of Share Capital
   Historical Movement in the Authorized Share Capital of the Company
  - 74 -




---



##### Table of Contents



Memorandum of Association and Bye-Laws
    - 75 -




---



##### Table of Contents



Objects and Purposes
  
    
    to carry on the business of constructing, establishing, owning, providing operating
and maintaining telecommunications networks in all parts of the world and to provide
telecommunications services;
    
    to carry on the business as a holding company and to acquire and hold shares,
stocks, debenture stock, bonds, mortgages, obligations and securities issued or
guaranteed by any entity;
    
    to acquire such shares and other securities by subscription, syndicate
participation, tender, purchase, exchange or otherwise;
    
    to coordinate the administration, policies, management, supervision, control,
research, planning, trading and any and all other activities of, and to act as
financial advisers and consultants to, any companies which may or which may become a
group company;
    
    to provide financing and financial investment, management and advisory services to
any group company; and
    
    as set forth in paragraphs (b) to (n) and (p) to (u) inclusive of the Second
Schedule to the Bermuda Act.
 - 76 -




---



##### Table of Contents



Board Actions
   Board Remuneration
  Directors Borrowing Powers
  Election or Removal of Directors
    - 77 -




---



##### Table of Contents



,
  Common Shares
    - 78 -




---



##### Table of Contents



Voting Rights
  Dividends
  Rights in Liquidation
  Transfer of Shares
  Amendment of Memorandum of Association and Bye-Laws
  - 79 -




---



##### Table of Contents



Meetings of Shareholder s
     - 80 -




---



##### Table of Contents



Access to Books and Records and Dissemination of Information
   Amalgamation
  Continuation
  Appraisal Rights and Shareholder Suits
  - 81 -




---



##### Table of Contents



Material Contracts
 
  
 
  
 Exchange Controls and Other Limitations Affecting Security Holders
    - 82 -




---



##### Table of Contents




    
    the acquisition or holding of land in Bermuda, except that required for its business
and held by way of lease or tenancy for terms of not more than 50 years or, with the
consent of the Minister of Finance, that required to provide accommodation or
recreational facilities for its employees and held by way of lease or tenancy for terms
of not more than 21 years;
    
    the taking of mortgages on land in Bermuda;
    
    the acquisition of any bonds or debentures secured on any land in Bermuda except
bonds or debentures issued by the Bermuda government or a public authority; or
    
    the carrying on of business of any kind in Bermuda other than with persons outside
Bermuda, except in certain limited circumstances such as doing business with another
exempted company in Bermuda in furtherance of our business carried on outside Bermuda.
 Taxation
  
    
    for purposes of the U.S. Internal Revenue Code, a citizen or resident of the United
States;
    
    a corporation or other entity taxable as a corporation created or organized under
the laws of the United States or any political subdivision thereof;
    
    an estate, the income of which is subject to U.S. federal income taxation regardless
of its source; or
    
    a trust which is subject to supervision of a court within the United States and the
control of one or more U.S. persons.
 - 83 -




---



##### Table of Contents




    
    Bermuda law;
    
    the U.S. Internal Revenue Code and current and proposed regulations under the
Internal Revenue Code;
    
    the administrative policies published by the U.S. Internal Revenue Service, or
IRS; and
    
    judicial decisions;
   Bermuda Tax Considerations
   - 84 -




---



##### Table of Contents



U.S. Tax Considerations
 Taxation of Dividends Distributed on our Common Shares .
    Taxation of Disposition of our Common Shares.
  Passive Foreign Investment Company Status.
  - 85 -




---



##### Table of Contents




    
    75% or more of its gross income is passive income, which includes interest,
dividends and certain rents and royalties not earned in the active conduct of a trade
or business (the Income Test); or
    
    50% or more of its assets, measured quarterly, generally by fair market value,
produce, or are held for the production of, passive income (the Asset Test).
   
    
    a predecessor corporation was not a PFIC;
    
    we establish to the satisfaction of the Internal Revenue Service that we would
not be a PFIC for our 2003 and 2004 taxable years based on current estimates; and
    
    we in fact are not a PFIC for either of our 2003 and 2004 taxable years.
    - 86 -




---



##### Table of Contents



- 87 -




---



##### Table of Contents



Controlled Foreign Corporation.
  Information Reporting and Backup Withholding.
   Documents on Display
  
 ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Foreign Currency Exchange Risks
   - 88 -




---



##### Table of Contents



Transaction risks
       - 89 -




---



##### Table of Contents



Translation risks
    Hedging against foreign exchange risks
    - 90 -




---



##### Table of Contents



Sensitivity analysis
  Interest Rates
   
 PART II
 
 ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
  
 ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
  
 ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
  
 ITEM 15. CONTROLS AND PROCEDURES
  - 91 -




---



##### Table of Contents




    
    pertain to the maintenance of records that in reasonable detail accurately and
fairly reflect the transactions and dispositions of the assets of the company;
    
    provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and
    
    provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the companys assets that could have a
material effect on the financial statements.
   - 92 -




---



##### Table of Contents




    
    We have engaged an external law firm to review various aspects of our Exchange
Act disclosure procedures.
    
    We have established a Disclosure Committee operating under a written Disclosure
Committee Charter approved by our Board. The Disclosure Committee Charter was adopted
by our Chief Executive Officer and Chief Financial Officer and ratified by our Board.
The Charter enumerates the Committees responsibilities, including designing disclosure
controls, monitoring their effectiveness and supervising the preparation of our
disclosure documents. The members of the Disclosure Committee are General Counsel
Stuart Blythe, Chief Financial Officer Brian McArthur Muscroft and European Finance
Director Steve Garry. The Disclosure Committee oversees the gathering of information
in connection with the preparation of the reports that we file under the Exchange
Act, including this Form 20-F, and works to ensure the accuracy and completeness of
our disclosures in such reports.
    
    The members of our Disclosure Committee have been directly involved in the
preparation and review of this Form 20-F.
    
    Further, our Board has approved and adopted a written Code of Ethics. See
Item 16B. Code of Ethics.
   
 ITEM 16A: AUDIT COMMITTEE FINANCIAL EXPERT
  
 ITEM 16B. CODE OF ETHICS
  - 93 -




---



##### Table of Contents



ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
   Year ended December 31,US$000(1)
    
    2004
    
    
    2003
    
    
    2002Audit Fees (2)
    
    
    321
    
    
    
    425
    
    
    
    518Audit-Related Fees (3)
    
    
    
    
    
    
    16
    
    
    
    Total audit and audit-related fees
    
    
    321
    
    
    
    441
    
    
    
    518Tax Fees (4)
    
    
    27
    
    
    
    20
    
    
    
    18All Other Fees
    
    
    
    
    
    
    
    
    
    
    Total Fees
    
    
    348
    
    
    
    461
    
    
    
    536
 
 (1)
    
    Predominantly all fees are billed in Pounds Sterling. The exchange rates used in preparing
this table are GBP:US$ 1:1.833, 1:1.633 for 2003 and 1:1.571 for 2002.(2)
    
    Consists of fees rendered for professional services for the audit of our annual financial
statements and services that are normally provided by the accountant in connection with
statutory and regulatory filings or engagements for those fiscal years. The 2003 figure
excludes £45,000 (approximately US$73,000) of fees in respect of the audit of an acquired
entity for the period prior to the acquisition by the Company. Of the 2002 audit fees,
£70,000 (approximately US$114,000) relate to the audit of the Predecessor.(3)
    
    Consists of fees for financial due diligence.(4)
    
    Consists of fees for UK tax compliance services. Audit Committees pre-approval policies and procedures
  - 94 -




---



##### Table of Contents



PART III
 
 ITEM 17. FINANCIAL STATEMENTS
  
 ITEM 18. FINANCIAL STATEMENTS
  
 ITEM 19. EXHIBITS
 Exhibit
    
    
    
    Description of Exhibit
    
    PageNumber1.1
    
    
    
    Certificate of Incorporation of Viatel Holding (Bermuda)
Limited. (Previously filed as Exhibit 1.1 to the
Companys Form 20-F for the year ended December 31, 2002
dated March 22, 2004 and incorporated by reference
herein.)1.2
    
    
    
    Memorandum of Association of Viatel Holding (Bermuda)
Limited. (Previously filed as Exhibit 1.2 to the
Companys Form 20-F for the year ended December 31, 2002
dated March 22, 2004 and incorporated by reference
herein.)
 - 95 -




---



##### Table of Contents



rExhibit
    
    
    
    Description of Exhibit
    
    PageNumber1.3
    
    
    
    Amendment to Memorandum of Association of Viatel Holding
(Bermuda) Limited. (Previously filed as Exhibit 1.3 to
the Companys Form 20-F for the year ended December 31,
2002 dated March 22, 2004 and incorporated by reference
herein.)1.4
    
    
    
    Bye-laws of Viatel Holding (Bermuda) Limited effective
from April 21, 2004. (Amending and reinstating those
Bye-Laws previously filed as Exhibit 99.2 to the
Companys Form 6-K dated February 5, 2004.).2.1
    
    
    
    Form of Registration Rights Agreement, among Viatel
Holding (Bermuda) Limited and the other parties thereto.
(Previously filed as Exhibit 2 to the Companys Form
20-F for the year ended December 31, 2002 dated March
22, 2004 and incorporated by reference herein.)2.2
    
    
    
    Registration Rights Agreement, among Viatel Holding
(Bermuda) Limited and the other parties thereto.
(Previously filed as Exhibit 2 to the Companys Form 6-K
dated April 28, 2004 and incorporated by reference
herein.)4.1
    
    
    
    Investment and Note Purchase Agreement, among Viatel
Holding (Bermuda) Limited and the other parties thereto.
(Previously filed as Exhibit 1 to the Companys Form 6-K
dated April 28, 2004 and incorporated by reference
herein).4.2
    
    
    
    Shareholders Agreement, among Viatel Holding (Bermuda)
Limited and the other parties thereto. (Previously filed
as Exhibit 3 to the Companys Form 6-K dated April 28,
2004 and incorporated by reference herein).4.3
    
    
    
    Form of Note, due 2014. (Previously filed as Exhibit 4
to the Companys Form 6-K dated April 28, 2004 and
incorporated by reference herein).4.4
    
    
    
    Investment and Note Purchase Agreement among Viatel
Holding (Bermuda) Limited and the other parties thereto
dated June 23, 2005.4.5
    
    
    
    Letter Agreement among Viatel Holding (Bermuda) Limited
and the other parties thereto dated June 23, 2005.4.6
    
    
    
    Form of Note, due 2007.4.7
    
    
    
    Employment Agreement between Viatel Holding (Bermuda)
Limited and the Chief Executive Officer, dated April 21,
2004.8
    
    
    
    List of subsidiaries of Viatel Holding (Bermuda) Limited.11
    
    
    
    Code of Ethics. (Previously filed as Exhibit 11 to the
Companys Form 20-F for the year ended December 31, 2002
dated March 22, 2004 and incorporated by reference
herein.)
 - 96 -




---



##### Table of Contents



Exhibit
    
    
    
    Description of Exhibit
    
    PageNumber12.1
    
    
    
    Certification of the Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.12.2
    
    
    
    Certification of the Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.13
    
    
    
    Certification of the Chief Executive Officer and the
Chief Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.15.1
    
    
    
    Amended Disclosure Statement with Respect to the First
Amended Joint Chapter 11 Plan of Reorganization of
Viatel, Inc. and Certain of its Subsidiaries (Previously
filed as Exhibit 2.1 to the Companys Form 8-K dated
January 22, 2004 and incorporated by reference herein.)
 - 97 -




---



##### Table of Contents



Viatel Holding (Bermuda) LimitedBy:
    /s/ Lucy WoodsLucy WoodsChief Executive Officer  - 98 -




---



##### Table of Contents



INDEX TO FINANCIAL STATEMENTS
 PageIndependent Registered Public Accounting Firms Report
    
    F-2Consolidated Balance Sheets as of December 31, 2004 and December 31,2003
    
    F-4Consolidated Statements of Operations for the years ended December 31,
2004 and 2003, and the periods ended December 31, 2002 and June 7, 2002
    
    F-5Consolidated Statements of Shareholders Equity for the years ended
December 31, 2004 and 2003, and the periods ended December 31, 2002 and
June 7, 2002
    
    F-7Consolidated Statements of Cash Flows for the years ended December 31,
2004 and 2003, and the periods ended December 31, 2002 and June 7, 2002
    
    F-8Notes to the Consolidated Financial Statements
    
    F-9
 F1




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
      F2




---



##### Table of Contents



F3




---



##### Table of Contents



VIATEL HOLDING (BERMUDA) LIMITED
AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
  
 31 December
    
    
    31 December2004
    
    
    2003ASSETSCurrent Assets:Cash and cash equivalents
    
    
    22,820
    
    
    
    30,378Restricted cash
    
    
    486
    
    
    
    Amounts receivable from exchange contracts, related party
    
    
    10,552
    
    
    
    Accounts receivable (net of allowance for doubtful debts of $1,567, 2003  $1,648)
    
    
    3,167
    
    
    
    4,026Amounts receivable from bankruptcy estates within one year
    
    
    5,320
    
    
    
    7,257VAT receivable
    
    
    3,676
    
    
    
    3,469Prepaid expenses and other current assets
    
    
    5,845
    
    
    
    6,427Total current assets
    
    
    51,866
    
    
    
    51,557Property and equipment, net
    
    
    37,986
    
    
    
    39,899Intangible assets, net
    
    
    2,198
    
    
    
    3,330Other assets
    
    
    
    
    
    
    96Deferred financing costs
    
    
    7,630
    
    
    
    Total assets
    
    
    99,680
    
    
    
    94,882LIABILITIES AND SHAREHOLDERS EQUITYCurrent Liabilities:Accounts payable
    
    
    9,322
    
    
    
    5,135Accrued administrative and priority claims
    
    
    
    
    
    
    1,868Accrued expenses
    
    
    7,937
    
    
    
    9,209Accrued interest
    
    
    1,955
    
    
    
    Accrual for French VAT payable
    
    
    
    
    
    
    6,076Deferred revenue
    
    
    4,626
    
    
    
    3,853Deferred income tax liability
    
    
    47
    
    
    
    Future performance obligations
    
    
    
    
    
    
    4,600Other current liabilities
    
    
    3,784
    
    
    
    2,374Total current liabilities
    
    
    27,671
    
    
    
    33,115Longterm liabilities:Deferred income tax liability
    
    
    
    
    
    
    304Convertible loan notes (Related Party  $32,167)
    
    
    36,617
    
    
    
    Total longterm liabilities
    
    
    36,617
    
    
    
    304Total liabilities
    
    
    64,288
    
    
    
    33,419Commitments and contingencies (Note 10)Shareholders equity:Common stock, $.01 par value: 2004  250,000,000 shares authorised; 10,630,000 shares
issued and outstanding, 2003  100,000,000 shares authorized; 10,730,000 shares
issued and outstanding
    
    
    106
    
    
    
    107Additional paidin capital
    
    
    116,045
    
    
    
    98,494Accumulated other comprehensive income
    
    
    18,459
    
    
    
    14,914Deferred stock compensation
    
    
    
    
    
    
    (13
    )Accumulated deficit
    
    
    (99,218
    )
    
    
    (52,039
    )Total shareholders equity
    
    
    35,392
    
    
    
    61,463Total liabilities and shareholders equity
    
    
    99,680
    
    
    
    94,882
 
 See accompanying notes to consolidated financial statements.
 F4




---



##### Table of Contents



VIATEL HOLDING (BERMUDA) LIMITED
AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (
 
 SuccessorSuccessor
    
    
    Successor
    
    
    From June 7,
    
    
    
    PredecessorYear Ended
    
    
    Year Ended
    
    
    2002 to
    
    
    
    From January 1,December 31,
    
    
    December 31,
    
    
    December 31,
    
    
    
    2002 to June 7,2004
    
    
    2003
    
    
    2002
    
    
    
    2002Revenue:Communication services revenues
    
    
    26,962
    
    
    
    17,205
    
    
    
    2,793
    
    
    
    
    1,216Operations and maintenance fee revenue
    
    
    1,828
    
    
    
    1,707
    
    
    
    1,371
    
    
    
    
    1,451Total revenue
    
    
    28,790
    
    
    
    18,912
    
    
    
    4,164
    
    
    
    
    2,667Operating expenses:Cost of sales
    
    
    (16,538
    )
    
    
    (10,015
    )
    
    
    (1,506
    )
    
    
    
    (1,518
    )Selling, general and administrative
(including noncash stock
compensation (income) / expense of
$(48), $(27), $75 (Successor), $4,567
(Predecessor))
    
    
    (67,797
    )
    
    
    (51,225
    )
    
    
    (30,840
    )
    
    
    
    (26,502
    )Gain on amounts due from bankruptcy
estates
    
    
    3,105
    
    
    
    358
    
    
    
    25,003
    
    
    
    
    Restructuring and impairment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (908
    )Depreciation and amortization
    
    
    (9,140
    )
    
    
    (7,181
    )
    
    
    (2,458
    )
    
    
    
    (1,736
    )Total operating expenses (net)
    
    
    (90,370
    )
    
    
    (68,063
    )
    
    
    (9,801
    )
    
    
    
    (30,664
    )Other operating income
    
    
    17,780
    
    
    
    
    
    
    
    
    
    
    
    
    Operating loss before reorganization items
    
    
    (43,800
    )
    
    
    (49,151
    )
    
    
    (5,637
    )
    
    
    
    (27,997
    )Reorganization items
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,662,669Operating (loss) / income
    
    
    (43,800
    )
    
    
    (49,151
    )
    
    
    (5,637
    )
    
    
    
    2,634,672Other income / (expense):Interest and other income
    
    
    775
    
    
    
    1,557
    
    
    
    986
    
    
    
    
    1,007Interest expense
    
    
    (4,395
    )
    
    
    
    
    
    
    (11
    )
    
    
    
    (63
    )Net (loss) / income before taxation
    
    
    (47,420
    )
    
    
    (47,594
    )
    
    
    (4,662
    )
    
    
    
    2,635,616Taxation
    
    
    241
    
    
    
    217
    
    
    
    
    
    
    
    
    Net (loss) / income
    
    
    (47,179
    )
    
    
    (47,377
    )
    
    
    (4,662
    )
    
    
    
    2,635,616Net (loss) / income per common share,
basic and diluted
    
    
    (4.42
    )
    
    
    (4.43
    )
    
    
    (0.44
    )
    
    
    
    51.72Weighted average common shares
outstanding, basic and diluted
    
    
    10,680
    
    
    
    10,705
    
    
    
    10,560
    
    
    
    
    50,963
 
 See accompanying notes to consolidated financial statements.
 F5




---



##### Table of Contents



VIATEL HOLDING (BERMUDA) LIMITED
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) / INCOME
(
 SuccessorSuccessor
    
    
    Successor
    
    
    From June 7,
    
    
    
    PredecessorYear Ended
    
    
    Year Ended
    
    
    2002 to
    
    
    
    From January 1,December 31,
    
    
    December 31,
    
    
    December 31,
    
    
    
    2002 to June 7,2004
    
    
    2003
    
    
    2002
    
    
    
    2002Net (loss) / income
    
    
    (47,179
    )
    
    
    (47,377
    )
    
    
    (4,662
    )
    
    
    
    2,635,616Foreign currency translation adjustment
    
    
    3,545
    
    
    
    11,279
    
    
    
    3,635
    
    
    
    
    7,009Comprehensive (loss) / income
    
    
    (43,634
    )
    
    
    (36,098
    )
    
    
    (1,027
    )
    
    
    
    2,642,625
 See accompanying notes to consolidated financial statements.
 F6




---



##### Table of Contents



VIATEL HOLDING (BERMUDA) LIMITED
AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
 (
 Number of
    
    
    
    
    
    
    Additional
    
    
    
    
    
    
    Foreign CurrencyShares of Common
    
    
    Common
    
    
    PaidIn
    
    
    Deferred Stock
    
    
    Translation
    
    
    AccumulatedStock
    
    
    Stock
    
    
    Capital
    
    
    Compensation
    
    
    Adjustments
    
    
    Deficit
    
    
    TotalBalance at January 1, 2002
    
    
    50,962,868
    
    
    
    510
    
    
    
    1,123,380
    
    
    
    (3,966
    )
    
    
    (95,962
    )
    
    
    (3,570,391
    )
    
    
    (2,546,429
    )Foreign Currency translation
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,009
    
    
    
    
    
    
    
    7,009Stock options issued
    
    
    
    
    
    
    
    
    
    
    2,569
    
    
    
    (2,569
    )
    
    
    
    
    
    
    
    
    
    
    Earned compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,567
    
    
    
    
    
    
    
    
    
    
    
    4,567Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,635,616
    
    
    
    2,635,616Impact of Fresh Start
Adjustments :Elimination of Accumulated
losses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    934,775
    
    
    
    934,775Elimination of foreign
currency translation reserve
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    88,953
    
    
    
    
    
    
    
    88,953Cancellation of shares in
predecessor
    
    
    (50,962,868
    )
    
    
    (510
    )
    
    
    (1,125,691
    )
    
    
    1,710
    
    
    
    
    
    
    
    
    
    
    
    (1,124,491
    )Issuance of common shares in
connection with plan of
reorganization
    
    
    10,560,000
    
    
    
    106
    
    
    
    98,530
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    98,636Successor Company balance,
June 7, 2002
    
    
    10,560,000
    
    
    
    106
    
    
    
    98,788
    
    
    
    (258
    )
    
    
    
    
    
    
    
    
    
    
    98,636Earned compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    75
    
    
    
    
    
    
    
    
    
    
    
    75Foreign Currency translation
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,635
    
    
    
    
    
    
    
    3,635Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,662
    )
    
    
    (4,662
    )Balance at December 31, 2002
    
    
    10,560,000
    
    
    
    106
    
    
    
    98,788
    
    
    
    (183
    )
    
    
    3,635
    
    
    
    (4,662
    )
    
    
    97,684Earned compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    68
    
    
    
    
    
    
    
    
    
    
    
    68Stock options exercised
    
    
    170,000
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2Shares exchanged for One World
    
    
    
    
    
    
    (1
    )
    
    
    (97
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (98
    )Stock options forfeited
    
    
    
    
    
    
    
    
    
    
    (197
    )
    
    
    102
    
    
    
    
    
    
    
    
    
    
    
    (95
    )Foreign Currency translation
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,279
    
    
    
    
    
    
    
    11,279Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (47,377
    )
    
    
    (47,377
    )Balance at December 31, 2003
    
    
    10,730,000
    
    
    
    107
    
    
    
    98,494
    
    
    
    (13
    )
    
    
    14,914
    
    
    
    (52,039
    )
    
    
    61,463Shares cancelled
    
    
    (100,000
    )
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1
    )Stock options forfeited
    
    
    
    
    
    
    
    
    
    
    (61
    )
    
    
    13
    
    
    
    
    
    
    
    
    
    
    
    (48
    )Beneficial conversion feature
    
    
    
    
    
    
    
    
    
    
    17,612
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,612Foreign Currency translation
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,545
    
    
    
    
    
    
    
    3,545Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (47,179
    )
    
    
    (47,179
    )Balance at December 31, 2004
    
    
    10,630,000
    
    
    
    106
    
    
    
    116,045
    
    
    
    
    
    
    
    18,459
    
    
    
    (99,218
    )
    
    
    35,392
 See accompanying notes to consolidated financial statements
 F7




---



##### Table of Contents



VIATEL HOLDING (BERMUDA) LIMITED
AND SUBSIDIARIES
 
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
 (
 SuccessorSuccessor
    
    
    Successor
    
    
    From June 7,
    
    
    
    PredecessorYear Ended
    
    
    Year Ended
    
    
    2002 to
    
    
    
    From January 1,December 31,
    
    
    December 31,
    
    
    December 31,
    
    
    
    2002 to June 7,2004
    
    
    2003
    
    
    2002
    
    
    
    2002Cash flows from operating activities:Net (loss) / income
    
    
    (47,179
    )
    
    
    (47,377
    )
    
    
    (4,662
    )
    
    
    
    2,635,616Adjustments to reconcile net (loss) / income to net
cash used in operating activities:Depreciation and amortization
    
    
    9,140
    
    
    
    7,181
    
    
    
    2,458
    
    
    
    
    1,736Loss on disposal of property and equipment
    
    
    344
    
    
    
    256
    
    
    
    
    
    
    
    
    Accreted interest expense on long-term debt
    
    
    2,930
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of deferred financing costs
    
    
    461
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of loan note discount
    
    
    1,003
    
    
    
    
    
    
    
    
    
    
    
    
    Deferred income tax liability
    
    
    (257
    )
    
    
    (217
    )
    
    
    
    
    
    
    
    Reorganization adjustments, net of cash
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,660,786
    )Stock-based compensation (income) / expense
    
    
    (48
    )
    
    
    (27
    )
    
    
    75
    
    
    
    
    4,567Noncash exchange of common shares
    
    
    
    
    
    
    (97
    )
    
    
    
    
    
    
    
    Changes in operating assets and liabilities, net of
effect of acquisitions:Decrease / (increase) in accounts and notes
receivable and accrued interest
    
    
    859
    
    
    
    1,869
    
    
    
    (540
    )
    
    
    
    8,200(Increase) in restricted cash
    
    
    (486
    )
    
    
    
    
    
    
    
    
    
    
    
    (Increase) in amounts receivable from exchange
contracts
    
    
    (10,552
    )
    
    
    
    
    
    
    
    
    
    
    
    Decrease / (increase) in prepaid expenses and other
receivables
    
    
    374
    
    
    
    (6,074
    )
    
    
    2,843
    
    
    
    
    6,180Decrease / (increase) in amounts receivable from
bankruptcy estates
    
    
    1,937
    
    
    
    13,628
    
    
    
    (15,622
    )
    
    
    
    13,737Decrease / (increase) in other assets
    
    
    96
    
    
    
    859
    
    
    
    (374
    )
    
    
    
    195(Decrease) / increase in accrued telecommunications
costs, accounts payable, and other accrued expenses
    
    
    (7,446
    )
    
    
    4,883
    
    
    
    2,057
    
    
    
    
    (1,589
    )Net cash (used in) / provided by operating activities
    
    
    (48,824
    )
    
    
    (25,116
    )
    
    
    (13,765
    )
    
    
    
    7,856Cash flows from investing activities:Capital expenditures
    
    
    (3,847
    )
    
    
    (2,180
    )
    
    
    (1,667
    )
    
    
    
    (8,721
    )Proceeds from disposal of property and equipment
    
    
    
    
    
    
    2,697
    
    
    
    
    
    
    
    
    2,051Cash paid for acquisitions, net of cash acquired
    
    
    
    
    
    
    (3,469
    )
    
    
    
    
    
    
    
    Net cash used in investing activities
    
    
    (3,847
    )
    
    
    (2,952
    )
    
    
    (1,667
    )
    
    
    
    (6,670
    )Cash flows from financing activities:Proceeds from exercise of stock options
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    
    Proceeds from preferred loan note offering
    
    
    52,250
    
    
    
    
    
    
    
    
    
    
    
    
    Deferred financing costs associated with loan note
offering
    
    
    (8,092
    )
    
    
    
    
    
    
    
    
    
    
    
    Net cash provided by financing activities
    
    
    44,158
    
    
    
    2
    
    
    
    
    
    
    
    
    Effects of exchange rate changes on cash
    
    
    955
    
    
    
    5,036
    
    
    
    605
    
    
    
    
    1,116Net (decrease) / increase in cash and cash equivalents
    
    
    (7,558
    )
    
    
    (23,030
    )
    
    
    (14,827
    )
    
    
    
    2,302Cash and cash equivalents at beginning of period
    
    
    30,378
    
    
    
    53,408
    
    
    
    68,235
    
    
    
    
    65,933Cash and cash equivalents at end of period
    
    
    22,820
    
    
    
    30,378
    
    
    
    53,408
    
    
    
    
    68,235Supplemental disclosure of cash flow activityInterest paid
    
    
    (2
    )
    
    
    
    
    
    
    8
    
    
    
    
    63Interest received
    
    
    775
    
    
    
    848
    
    
    
    906
    
    
    
    
    1,007Taxes paid
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Receipts from bankruptcy estates
    
    
    5,612
    
    
    
    13,628
    
    
    
    10,030
    
    
    
    
    13,737
 See accompanying notes to consolidated financial statements
 F8




---



##### Table of Contents



VIATEL HOLDING (BERMUDA) LIMITED
AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (
 (1) Nature of Business, Background And Basis of Presentation
    
  
    F9




---



##### Table of Contents



VIATEL HOLDING (BERMUDA) LIMITED
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(
    pari passu
 
  
  F10




---



##### Table of Contents



VIATEL HOLDING (BERMUDA) LIMITED
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(
 (2) Significant Accounting Policies
  (a) Basis of Consolidation
  (b) Use of Estimates
  (c) Statement of Position 907, Financial Reporting by Entities in Reorganization under the
Bankruptcy Code
 
  
  
    
    the reorganization value of the entity should be allocated to the entitys assets in
conformity with the procedures specified by Statement of Financial Accounting Standards
No. 141, Business Combinations (SFAS No. 141) for transactions reported on the
basis of the purchase method; and
    
    each liability existing as at the Effective Date, other than deferred taxes, should
be stated at present values of amounts to be paid determined at appropriate current
interest rates.
  F11




---



##### Table of Contents



VIATEL HOLDING (BERMUDA) LIMITED
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(
  (d) Revenue and Cost of Sales
 
 
 
  
 
  
 
  
 
  
 F12




---



##### Table of Contents



VIATEL HOLDING (BERMUDA) LIMITED
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(
 (e) Advertising Costs
  (f) Income Taxes
  (g) Net (loss)/income per Common Share
  (h) Property and Equipment
   F13




---



##### Table of Contents



VIATEL HOLDING (BERMUDA) LIMITED
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(
 Communications systems and network infrastructure
    
    5 to 18 yearsFurniture, office and computer equipment
    
    2 to 5 yearsLand
    
    Not depreciated
 (i) Intangible Assets
    (j) Impairment of Longlived Assets
   (k) Cash and Cash Equivalents
 F14




---



##### Table of Contents



VIATEL HOLDING (BERMUDA) LIMITED
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(
  (l) Amounts receivable from exchange contracts
 
  
 (m) Convertible Notes
    (n) Foreign Currency Translation
    F15




---



##### Table of Contents



VIATEL HOLDING (BERMUDA) LIMITED
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(
 (o) Financial Instruments, Derivatives and Concentration of Credit Risk
 
  
  
    (p) Stock Option Plan
  F16




---



##### Table of Contents



VIATEL HOLDING (BERMUDA) LIMITED
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(
   SuccessorSuccessor
    
    
    Successor
    
    
    From June 7,
    
    
    
    PredecessorYear Ended
    
    
    Year Ended
    
    
    2002 to
    
    
    
    From January 1,December 31,
    
    
    December 31,
    
    
    December 31,
    
    
    
    2002 to June 7,2004
    
    
    2003
    
    
    2002
    
    
    
    2002Net (loss) / income as reported
    
    
    (47,179
    )
    
    
    (47,377
    )
    
    
    (4,662
    )
    
    
    
    2,635,616Add: noncash stockbased compensation
expense/(income)
    
    
    (48
    )
    
    
    (27
    )
    
    
    75
    
    
    
    
    4,567Less: SFAS 123 stockbased compensation charge /
(credit)
    
    
    69
    
    
    
    38
    
    
    
    (106
    )
    
    
    
    (4,029
    )Pro forma net (loss) / income
    
    
    (47,158
    )
    
    
    (47,366
    )
    
    
    (4,693
    )
    
    
    
    2,636,154Proforma basic and diluted (loss) / income per share
    
    
    (4.42
    )
    
    
    (4.42
    )
    
    
    (0.44
    )
    
    
    
    51,73Basic and diluted net (loss) / income per common
share, as reported
    
    
    (4.42
    )
    
    
    (4.43
    )
    
    
    (0.44
    )
    
    
    
    51.72
 (q) Segment Information
  (r) Comprehensive (Loss)/Income
  F17




---



##### Table of Contents



VIATEL HOLDING (BERMUDA) LIMITED
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(
  (s) Recent Accounting Pronouncements Not Yet Adopted
    (3) Fresh Start Reporting
 F18




---



##### Table of Contents



VIATEL HOLDING (BERMUDA) LIMITED
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(
     F19




---



##### Table of Contents



VIATEL HOLDING (BERMUDA) LIMITED
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(
  Balance Sheet at June 7, 2002Fresh StartReporting Settlement ofClaims, DebtPredecessor
    
    
    discharge and
    
    
    
    SuccessorCompany Balance
    
    
    Equity
    
    
    
    Company BalanceSheet
    
    
    Restructuring
    
    
    
    SheetCash and cash equivalents
    
    
    70,118
    
    
    
    (1,883
    )
    
    
    
    68,235Amounts receivable from bankruptcy estates
    
    
    5,263
    
    
    
    
    
    
    
    
    5,263Trade receivables
    
    
    4,028
    
    
    
    
    
    
    
    
    4,028Other current assets
    
    
    6,131
    
    
    
    
    
    
    
    
    6,131Property and equipment
    
    
    35,708
    
    
    
    
    
    
    
    
    35,708Deferred financing costs
    
    
    61,865
    
    
    
    (61,865
    )
    
    
    
    Other assets
    
    
    581
    
    
    
    
    
    
    
    
    581Total assets acquired
    
    
    183,694
    
    
    
    (63,748
    )
    
    
    
    119,946Current liabilities
    
    
    (51,533
    )
    
    
    30,223
    
    
    
    
    (21,310
    )Liabilities subject to compromise
    
    
    (2,357,935
    )
    
    
    2,357,935
    
    
    
    
    (2,409,468
    )
    
    
    2,388,158
    
    
    
    
    (21,310
    )Preferred stock
    
    
    (338,259
    )
    
    
    338,259
    
    
    
    
    Shareholders equity
    
    
    (2,564,033
    )
    
    
    2,662,669
    
    
    
    
    98,636
  
    
    Elimination of the deferred financing costs balance of the Predecessor relating to
Predecessors liabilities subject to compromise.
    
    Elimination of the deferred revenue balances of the Predecessor and recognition of
the performance obligations under longterm contracts that were entered into by
Predecessor to reflect fair value.
    
    Elimination of Predecessors liabilities subject to compromise.
    
    Cancellation of Predecessors common stock and the elimination of accumulated deficit.
   F20




---



##### Table of Contents



VIATEL HOLDING (BERMUDA) LIMITED
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(
 (4) Amounts receivable from exchange contracts
  (5) Property and Equipment
  2004
    
    
    
    2003Land and buildings
    
    
    500
    
    
    
    
    500Communications systems and network infrastructure
    
    
    53,072
    
    
    
    
    46,226Furniture, office and computer equipment
    
    
    2,314
    
    
    
    
    1,98055,886
    
    
    
    
    48,706Less accumulated depreciation
    
    
    (17,900
    )
    
    
    
    (8,807
    )Net book value
    
    
    37,986
    
    
    
    
    39,899
 
  
  (6) Intangible Assets
  2004
    
    
    
    2003Customer Relationships (see Note 11)
    
    
    6,244
    
    
    
    
    5,709Less amortization
    
    
    (4,046
    )
    
    
    
    (2,379
    )Net Book Value
    
    
    2,198
    
    
    
    
    3,330
  F21




---



##### Table of Contents



VIATEL HOLDING (BERMUDA) LIMITED
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(
 (7) Deferred financing costs
  2004
    
    
    
    2003Financing costs
    
    
    8,092
    
    
    
    
    Less amortization
    
    
    (462
    )
    
    
    
    Net Book Value
    
    
    7,630
    
    
    
    
    
 
 (8) Convertible loan notes
 
    
  
 
 
 F22




---



##### Table of Contents



VIATEL HOLDING (BERMUDA) LIMITED
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(
 
 
   
  
 
  
  
 
 (9) Stock Incentive Plans
   F23




---



##### Table of Contents



VIATEL HOLDING (BERMUDA) LIMITED
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(
     Number of ExercisableWeighted Average
    
    
    Number of Shares
    
    
    options at end of eachExercise Price
    
    
    (in thousands)
    
    
    yearOutstanding at
December 31,
2001
    
    $
    25.11
    
    
    
    567
    
    
    
    567Granted at
below market
price before
Effective Date
(at a weighted
average fair
value of
$6.02)
    
    
    5.65
    
    
    
    744Forfeited
    
    
    25.11
    
    
    
    (567
    )At June 7, 2002
    
    $
    5.65
    
    
    
    744
    
    
    
    408Outstanding at
December 31,
2002
    
    $
    5.65
    
    
    
    744
    
    
    
    408Forfeited
    
    
    8.33
    
    
    
    (384
    )Exercised
    
    
    0.01
    
    
    
    (170
    )Outstanding at
December 31,
2003
    
    $
    5.26
    
    
    
    190
    
    
    
    150Forfeited
    
    
    8.33
    
    
    
    (120
    )Exercised
    
    
    0.01
    
    
    
    (70
    )Outstanding at
December 31,
2004
    
    
    
    
    
    
    
    
    
    
    
  F24




---



##### Table of Contents



VIATEL HOLDING (BERMUDA) LIMITED
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(
   (10) Other operating income
  (11) Acquisitions
  Netcom
  Current Assets
    
    
    1,063Property and Equipment
    
    
    775Intangible assets
    
    
    1,737Deferred income tax liability
    
    
    (521
    )Current Liabilities
    
    
    (2,168
    )Net assets
    
    
    886ConsiderationCash
    
    
    722Expenses
    
    
    164Total consideration
    
    
    886
 F25




---



##### Table of Contents



VIATEL HOLDING (BERMUDA) LIMITED
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(
   Cybernet
  Cash
    
    
    331Current Assets
    
    
    843Property and Equipment
    
    
    942Intangible assets
    
    
    3,539Current Liabilities
    
    
    (2,697
    )Net assets
    
    
    2,958ConsiderationCash
    
    
    2,908Expenses
    
    
    50Total consideration
    
    
    2,958
   Year ended
    
    
    From June 7, 2002December 31,
    
    
    to December 31,2003
    
    
    2002Revenue
    
    
    21,006
    
    
    
    11,466Net loss
    
    
    (47,520
    )
    
    
    (5,294
    )Basic and diluted net loss per share
    
    
    (4.44
    )
    
    
    (0.50
    )
 (12) Income Taxes
   F26




---



##### Table of Contents



VIATEL HOLDING (BERMUDA) LIMITED
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(
     Deferred Income Tax Assets
 2004
    
    
    2003US net operating loss carryforwards
    
    
    
    
    
    
    2,119Foreign net operating loss carryforwards
    
    
    43,756
    
    
    
    54,531Foreign property and equipment
temporary differences
    
    
    7,914
    
    
    
    7,219Total gross deferred tax assets
    
    
    51,670
    
    
    
    63,869Less valuation allowance
    
    
    (51,670
    )
    
    
    (63,869
    )Net deferred tax assets
    
    
    
    
    
    
    
     F27




---



##### Table of Contents



VIATEL HOLDING (BERMUDA) LIMITED
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(
   (13) Commitments and Contingencies
 (a) Leases and long-term contracts
   
 Network
    
    
    Standby
    
    
    Office Space
    
    
    Motor
    
    
    TotalLocaions
    
    
    Maintenance
    
    
    
    
    
    
    Vehicles2005
    
    
    4,452
    
    
    
    3,678
    
    
    
    911
    
    
    
    30
    
    
    
    9,0712006
    
    
    3,310
    
    
    
    52
    
    
    
    862
    
    
    
    14
    
    
    
    4,2382007
    
    
    2,730
    
    
    
    
    
    
    
    855
    
    
    
    
    
    
    
    3,5852008
    
    
    2,337
    
    
    
    
    
    
    
    772
    
    
    
    
    
    
    
    3,1092009
    
    
    2,185
    
    
    
    
    
    
    
    772
    
    
    
    
    
    
    
    2,957Thereafter
    
    
    18,771
    
    
    
    
    
    
    
    1,929
    
    
    
    
    
    
    
    20,700Total minimum payments
    
    
    33,785
    
    
    
    3,730
    
    
    
    6,101
    
    
    
    44
    
    
    
    43,660
 
  (b) Litigation
  F28




---



##### Table of Contents



VIATEL HOLDING (BERMUDA) LIMITED
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(
  
   
 
 
     
 
    
 F29




---



##### Table of Contents



VIATEL HOLDING (BERMUDA) LIMITED
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(
 September 2005.
 
  
  
   (c) Amounts due from Liquidators of bankruptcy estates
  F30




---



##### Table of Contents



VIATEL HOLDING (BERMUDA) LIMITED
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(
  (d) The Employee Benefit Trust
 
  
 
  
 
  
 (14) Segment and Geographic Data
    F31




---



##### Table of Contents



VIATEL HOLDING (BERMUDA) LIMITED
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(
  Successor
    
    
    Successor
    
    
    Successor
    
    
    PredecessorYear Ended
    
    
    Year Ended
    
    
    From June 7,
    
    
    From January 1,December 31,
    
    
    December 31,
    
    
    2002 to December
    
    
    2002 to June 7,2004
    
    
    2003
    
    
    31, 2002
    
    
    2002United Kingdom
    
    
    10,560
    
    
    
    7,998
    
    
    
    1,497
    
    
    
    2,301Switzerland
    
    
    15,188
    
    
    
    9,041
    
    
    
    
    
    
    
    Other Western Europe
    
    
    2,366
    
    
    
    397
    
    
    
    531
    
    
    
    North America
    
    
    676
    
    
    
    1,476
    
    
    
    2,136
    
    
    
    366Consolidated
    
    
    28,790
    
    
    
    18,912
    
    
    
    4,164
    
    
    
    2,667
   
 Successor
    
    
    Successor
    
    
    Successor
    
    
    PredecessorDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    June 7,2004
    
    
    2003
    
    
    2002
    
    
    2002France
    
    
    15,208
    
    
    
    14,904
    
    
    
    14,009
    
    
    
    15,095United Kingdom
    
    
    4,257
    
    
    
    6,950
    
    
    
    7,420
    
    
    
    343Belgium
    
    
    5,194
    
    
    
    5,514
    
    
    
    5,213
    
    
    
    5,376Germany
    
    
    5,560
    
    
    
    5,888
    
    
    
    5,022
    
    
    
    5,179Switzerland
    
    
    5,617
    
    
    
    6,813
    
    
    
    3,205
    
    
    
    1,586The Netherlands
    
    
    3,000
    
    
    
    3,051
    
    
    
    2,844
    
    
    
    2,933North America
    
    
    8,978
    
    
    
    205
    
    
    
    234
    
    
    
    262Consolidated
    
    
    47,814
    
    
    
    43,325
    
    
    
    37,947
    
    
    
    30,774
 
 (15)Valuation and Qualifying Accounts
  Successor
    
    
    Successor
    
    
    Successor
    
    
    PredecessorYear Ended
    
    
    Year Ended December
    
    
    From June 7, 2002
    
    
    From January 1,December 31,
    
    
    31,
    
    
    to December 31,
    
    
    2002 to June 7,2004
    
    
    2003
    
    
    2002
    
    
    2002Allowances for doubtful debtsBalance at beginning of period
    
    
    (1,648
    )
    
    
    (790
    )
    
    
    
    
    
    
    Additions charged to costs and expenses
    
    
    (883
    )
    
    
    (1,034
    )
    
    
    (790
    )
    
    
    Utilizations
    
    
    964
    
    
    
    176
    
    
    
    
    
    
    
    Balance at end of period
    
    
    (1,567
    )
    
    
    (1,648
    )
    
    
    (790
    )
    
    
    
 F32




---



##### Table of Contents



VIATEL HOLDING (BERMUDA) LIMITED
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(
 (16) Authorized Share Capital
  (17) Related Party Transactions
 
  
 
  
 
  
  (18) Subsequent events
 
  
 F33




---



##### Table of Contents



VIATEL HOLDING (BERMUDA) LIMITED
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(
 
  
 F34