Last year Tiscali negotiated a new 150m euro ($193.7m) loan from Silver Point and its affiliates. That facility comprised two tranches, with the first tranche of 50m euros ($80m) provided in August 2005, which Tiscali says it has already used. The second 100m euro ($129m) tranche was expected to be made available in September 2006.

However, with only 17.3m euros ($22.3m) in cash available, down 42% from 30m euros ($38.7m) at the end of December, Tiscali said it has reviewed its credit line. This drop has meant the loan has now been increased to 220m euros ($284m) from 150m euros ($193.7m). This extended credit line comes despite heavy asset sales over the past two years, as the ISP sought to tighten its focus on in Germany, Italy, the Netherlands, the UK, and the Czech Republic.

Tiscali was once regarded as a serious challenger to Telecom Italia, but it has had a difficult couple of years after a series of mistakes including an over-ambitious international expansion policy left it struggling to repay maturing bonds.

In August 2005 it sold its optical fiber network unit Tiscali International Network SAS to Telecom Italia SpA’s Telecom Italia Sparkle unit for 8m euros ($9.8m). Then in June last year it sold off its satellite broadband business in Italy for an undisclosed amount to Irish internet service provider Digiweb Ltd. In April 2005, it sold its 95% stake in LibertySurf, a French internet service provider, to Telecom Italia SpA for 266m euros ($342m).

In 2004 it raised 170m euros ($219m) in total by offloading businesses in Austria, Norway, Sweden, Switzerland, and South Africa, as well as by offering new stock.

However, Cagliari, Italy-based Tiscali has seen an increase in broadband ADSL connections of 211,000, which helped increase its ADSL customer base to over 1.9 million users. This in turn has helped push first-quarter sales up but the ISP increased a net loss for the period. For the first quarter it posted a net loss up 39% at 19.3m euros ($25m) from 13.7m euros ($17.7m) in the year-ago period. Sales however rose 17% to 202.7m euros ($262m) from 173.8m euros ($224m).

Tiscali said it enjoyed strong growth in ADSL demand in the UK, where subscriptions rose over 150,000 in the quarter to more than 1 million, making it by far Tiscali’s most important market. In Italy, broadband subscriptions increased by about 50,000 to over 350,000.

Despite the growth in ASDL connections, there was still concerns that Tiscali is simply too small and diverse when compared with the continental giants that dominate the most important European markets such as Germany, France, and the UK.

The recent takeover speculation surrounding its crown jewel (the UK operation), will no doubt increase these concerns. Net debt at Tiscali has now risen to 313.6m euros ($405m) from 290.1m euros ($374m) at the end of 2005 and many will continue to wonder whether it is living on borrowed time.