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August 21, 2001 — (WEB HOST INDUSTRY REVIEW) — Flag Telecom (flagtelecom.com), a leading, London-based network services provider and independent carriers’ carrier, yesterday announced that Flag Asia Limited has secured financing for Flag North Asian Loop (FNAL) of up to $300 million under a syndicated credit facility, arranged by Westdeutsche Landesbank Girozentrale, New York (westlb.de).
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“To ensure the project was executed on a fast track, we initially funded
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FNAL completely from our own cash resources and presale proceeds from
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Level3,” Ed McCormack, COO of Flag Telecom, said in a statement. “The
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facility therefore releases some of our own funding that we had previously
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committed to the project. As a result, we have increased our cash resources
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to support future initiatives and to enhance liquidity in 2002 and beyond.”
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“The development of FNAL has been an important part of our network expansion
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plan and a major step in our strategy to develop a low-cost, scaleable
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global IP network,” he continued. “FNAL will be a market leader, offering
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capacity to the Asian regional markets and leveraging our substantial
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operational experience in the region.”
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The credit facility has been syndicated to international banks and is a 6
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1/2 year project financing term facility at an interest rate of LIBOR plus
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between 225 to 325 basis points on drawn amounts. Under the terms of the
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facility, Flag Telecom Holdings Limited will lend up to $100 million to its
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subsidiary, which will be reduced if further external lenders are brought
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into the syndicate group. Westdeutsche acted as lead arranger,
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administration and security agent and Royal Bank of Scotland acted as
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documentation agent.
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FNAL is the six fibre pair, multi-terabit, intra-Asian system being
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developed in association with Level3 Communications, Inc. (level3.com)
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announced in January this year. The Eastern leg of the system, linking Hong
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Kong to Japan, was developed by Level3 and was commissioned in June.
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City-to-city services between Hong Kong and Tokyo were initiated this month
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and the Taiwan spur on this leg is progressing to schedule. Work on the
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Western leg of the system, being developed by Flag Telecom and connecting
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Hong Kong, Korea and Japan, is also progressing to schedule and in June it
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was announced that an agreement had been reached with Korea Telecom to build
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and operate the landing station at Pusan, Korea.
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The fit out of PoPs in the cities served by the system and the establishment
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of backhaul connections are in progress, with completion expected next year.
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Flag Telecom will manage and operate the entire system once integrated. FNAL
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will be more than 10,000 route kilometres in length and Flag Telecom and
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Level 3 will each have three fibre pairs on the system. FNAL uses
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state-of-the-art DWDM technology and is expected to offer a maximum capacity
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of 2.5- 3.8Tbps. This terabit technology is combined with SDH/SONET
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networking to provide customers with seamless city-to-city connectivity.
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