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January 17, 2002 — (WEB HOST INDUSTRY REVIEW) — KPNQwest (kpnqwest.com), a pan-European data communications
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and hosting company, announced yesterday that the European Commission has
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approved KPNQwest’s acquisition of the Ebone and Central Europe assets of
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Global TeleSystems Inc (gtsgroup.com). The European Commission decided that
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the acquisition would not lead to the creation or strengthening of a
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dominant position in any relevant telecommunications market.
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Commenting on the European Commission’s decision, Jack McMaster, president
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and CEO of KPNQwest said, “Today’s decision marks a significant milestone in
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our acquisition of Ebone and GTS Central Europe. It also marks an inflection
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point in the consolidation of European telecommunications services. At the
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same time, it confirms our belief that the combined company will offer a
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competitive pan-European set of products and services in the data
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communications and hosting market, which continues to be identified as a
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growth area in Europe.”
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On Oct. 18, KPNQwest announced its intention to acquire the GTS assets in a
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pre-negotiated bankruptcy proceeding for Euro 645 million (net of cash).
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KPNQwest will issue approximately Euro 210 million in 10-year convertible
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notes to GTS bondholders in exchange for GTS bonds of Euro 1.9 billion and
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will assume the GTS credit facility of approximately Euro 210 million and
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GTS capital leases of approximately Euro 250 million at the date of closing.
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GTS will have approximately Euro 25 million in cash at closing. KPNQwest and
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the GTS credit facility banks have agreed to replace the current GTS
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facility with a Euro 500 million facility (in the aggregate).
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After the acquisition, KPNQwest expects pro forma revenues of Euro 1.3 – 1.4
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billion in 2002, pro forma revenue and earnings before interest, taxes,
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depreciation and amortization of Euro 175-200 million in 2002. With the
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increased EBITDA and credit facility, KPNQwest expects that it is fully
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funded through the time it becomes free cash flow positive in the fourth
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quarter of 2003.
