KPNQwest has 5 to 10 suitors

KPNQwest has seen its debt mount after a spending spree to expand

AMSTERDAM, May 24 (Reuters) - Ailing Dutch datacommunications company KPNQwest, which has filed for protection from creditors, is in talks with five to 10 firms interested in buying parts of its network, an industry source told Reuters on Friday.

"There are between five and 10 companies that have signed non-disclosure agreements,'' the source told Reuters.

Companies sign such agreements during negotiations to protect their proprietary data from being made public.

KPNQwest filed for protection from creditors on Thursday after its major shareholders walked out and its banks declined to extend further credit.

Shares in the embattled firm collapsed at the open, diving 65.5 percent to 0.20 euros, having been suspended all day on Thursday. The shares have fallen 98 percent from their year high of 8.67 euros in January.

MORE STORIES • KPNQwest faces cash crunch  • Dutch KPN offers glimmer of hope

KPNQwest said on Thursday it was in talks with key shareholders and banks to find funding sources, but that it had so far failed to sell assets which had been targeted for disposal.

The source said on Friday that interested companies named in a Financial Times report were "pretty accurate'' but added that there were others.

CNN NewsPass VIDEO KPNQwest is considering whether to file for chapter-11 style protection from creditors. Jim Boulden reports. Play video

The newspaper named as suitors Britain's Cable & Wireless and BT as well as AT&T and Verizon of the U.S. and Spain's Telefonica.

The chances of fresh funds from either of its strategic shareholders -- Dutch KPN Telecom and U.S.-based Qwest Communications -- looked slim after their representatives as well as independent directors resigned en masse from the supervisory board on Thursday.