The future of Tiscali has been thrown into doubt after the company's auditors refused to sign off its 2008 accounts.
Tiscali has 1.8 million UK customers, but its £450m debt load worries auditing firm Ernst & Young, which has refused to sign off the accounts because of "fundamental uncertainties" in the internet service provider's business plan.
"The company, in disagreement with the conclusion drawn by the audit report, believes that it has co-operated at best and that it has provided all the information necessary to enable the independent auditors to issue an audit opinion on its 2008 financial statements," said Tiscali in a statement.
"In particular, with regard to the process of debt negotiation, the company underlines that it has already obtained a period of standstill from the lending banks until June 2009."
Tiscali has been trying to sell its UK arm for over a year, but the leading contender, BSkyB, pulled out of negotiations after failing to agree a price.
Tiscali will continue trading for the moment, and is reportedly in discussions with banks to reduce its debt burden.
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