Savvis receives $158 million cash infusion
14 March 2002 | 3069 views | 0
Savvis Communications, a provider of network services to global corporations and financial services firms, has announced a $158 million VC cash infusion from Welsh, Carson, Anderson and Stowe to reduce its debt burden and other liabilities and provide additional working capital.
Savvis' Financial Xchange, a private IP VPN service platform, connects 4700 financial institutions to financial applications and data worldwide and is one of the largest carriers of Financial Information eXchange protocol (FIX) traffic in the United States.
Rob McCormick, Savvis' chief executive officer and chairman welcomed the new funding, which has come against a depressing backdrop for the global telecomms industry, marked by a spate of debt-related failures and problems at Global Crossing, Qwest WorldCom, McLeod, PSi Net and others.
Says McCormick: "Bucking the trend in our industry, we will have a robust balance sheet when this transaction is completed, with only a modest amount of remaining debt and funds to ramp up sales of our IP VPN, managed hosting and Internet services."
Savvis reported Ebidta positive for the fourth quarter 2001, a year ahead of plan.
Under the refinancing agreement, Savvis will issue approximately $158 million of 11.5 percent convertible preferred stock in exchange for a combination of cash and debt. The transaction will reduce Savvis' debt by 64% to approximately $93 million and will result in an extraordinary gain of approximately $65 million in the first quarter of 2002.
Upon completion Welsh, Carson, Anderson & Stowe will hold approximately 56% of Savvis' voting stock.
Savvis says is has also reached agreement with GE Capital Vendor Financial Services to amend approximately $57 million of capital lease obligations. The amended lease provides for repayment at the end of the fifth year and 12 percent interest payable in cash or in kind, for the first three years.