Dsl.Net (AMEX:BIZ)
Historical Stock Chart
From May 2019 to May 2024
DSL.net, Inc. (AMEX: BIZ), a leading nationwide provider
of broadband communications services to businesses, today announced
that it has reached an agreement with DunKnight Telecom Partners LLC
under which DSL.net is to receive up to $10 million in new debt
financing. The first $6 million of such financing has been received
and used by the Company to eliminate $30.8 million in senior secured
debt due July 6, 2006, cancel all outstanding Series Z Preferred Stock
that carried a liquidation preference of $15.7 million, and cancel
warrants to purchase approximately 191 million shares of the Company's
common stock, all of which debt and equity interests were held by the
Company's former senior lenders, Deutsche Bank and VantagePoint
Venture Partners. The remaining $4 million of new financing from
DunKnight will be funded in January 2006, and will help support the
Company's working capital needs.
"This agreement is the culmination of a year-long effort by the
senior management team, with the support of the Company's Board of
Directors and Jefferies Broadview, a division of Jefferies & Company,
Inc., the Company's financial advisor, in which we fine-tuned the
Company's operations, realigned its strategy and recapitalized the
Company," said Kirby G. "Buddy" Pickle, departing president and chief
executive officer of DSL.net. "I am pleased to have helped navigate
the Company through this realignment process and believe that this
transaction is a significant step in better positioning DSL.net to
expand its Voice over Internet Protocol (VoIP) strategy and take
advantage of potential growth opportunities in the markets served by
the Company's high-quality broadband network and VoIP platform.
DSL.net's employees and customers should be quite pleased with this
announcement."
For the initial $6 million funding, the Company issued an $8
million promissory note. For the remaining $4 million funding, which
is subject to certain terms and conditions, the Company will issue, on
Jan. 3, 2006, a $5 million promissory note. The notes, which total an
aggregate face principal amount of $13 million, will both mature on
Aug. 2, 2006, and bear interest at 18 percent annually, with interest
payable monthly in arrears in cash based on the face principal amount
of the notes. The new debt is secured by a lien on substantially all
of the Company's assets. In addition, the terms of the debt contain
certain on-going financial covenants and various operational
covenants, including restrictions on the Company's ability to change
its business operations and restrictions on the Company's issuance of
additional debt or equity securities other than for purposes of paying
off DunKnight's debt in full.
"This transaction improves our balance sheet and includes a
commitment to provide us, in January of 2006, with additional working
capital," said Walter R. Keisch, DSL.net's chief financial officer.
"The Company will need to raise additional capital in 2006;
nevertheless, this financing is a milestone event for the Company and
demonstrates the investor's confidence in our outstanding network and
growth potential."
As part of the financing, David F. Struwas has been appointed as
the Company's new chief executive officer and as a director on the
Company's Board, replacing Pickle, who served as CEO and as a director
since April 2004. Struwas, who was one of the Company's original
founders, previously served as the Company's CEO from November 1998 to
April 2004. During his tenure, DSL.net was named the 49th fastest
growing technology company in North America for the five-year period
ending Dec. 31, 2003, as part of the Deloitte Technology Fast 500
program. Most recently, Struwas, who has a minority, non-managing
membership interest in DunKnight Telecom Partners LLC, has served as a
consultant in the telecommunications industry. Previously, Struwas
held key positions with Brooks Fiber-Worldcom and Southern New England
Telephone, which is now part of SBC Communications. Struwas has nearly
20 years of senior-level experience in the telecommunications
industry.
"Dave's in-depth knowledge of the Company and his track record of
growth in the companies he's been involved with will be valuable
assets as DSL.net employs its strategic initiatives in the VoIP
marketplace," said Pickle. "I've enjoyed my association with the
Company and its employees, particularly working closely with a very
dedicated group of senior executives, and it is truly a pleasure to
pass the reigns of DSL.net back over to one of its original founders."
In addition, as part of the DunKnight financing, Keir Kleinknecht,
the manager and leading principal of DunKnight, has been appointed to
the Company's Board of Directors, and William J. "Jeff" Marshall,
Deutsche Bank's former representative to the Company's Board, has
resigned from the Company's Board of Directors.
On a separate matter, the Company is still evaluating various
alternatives in response to the notice received from The American
Stock Exchange ("Amex") in October 2005, advising the Company that
Amex deems it appropriate for the Company to effect a reverse split of
its shares of common stock within a reasonable amount of time to
address the low trading price of such stock.
About DSL.net
DSL.net, Inc. is a leading nationwide provider of broadband
communications services to businesses. The Company combines its own
facilities, nationwide network infrastructure and Internet Service
Provider (ISP) capabilities to provide high-speed Internet access,
private network solutions and value-added services directly to small-
and medium-sized businesses or larger enterprises looking to connect
multiple locations. DSL.net product offerings include T-1, DS-3 and
business-class DSL services, virtual private networks (VPNs), frame
relay, Web hosting, DNS management, enhanced e-mail, online data
backup and recovery services, firewalls and nationwide dial-up
services, as well as integrated voice and data offerings in select
markets. For more information, visit www.dsl.net, e-mail info@dsl.net,
or call 1-877-DSL-NET1 (1-877-375-6381).
This press release may contain forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended,
such as the Company's future business prospects, and, to the extent it
does, these forward-looking statements are subject to a variety of
risks and uncertainties, many of which are beyond DSL.net's control,
which could cause actual results to differ materially from those
contemplated in these forward-looking statements. In particular, the
risks and uncertainties associated with DSL.net's business include,
among other things, (i) fluctuations in DSL.net's quarterly operating
results, which could adversely affect the price of its common stock;
(ii) DSL.net's unproven business model, which may not be successful;
(iii) DSL.net's ability to raise sufficient additional capital on
acceptable terms, or at all, to finance continuing operations and the
repayment of DSL.net's debt to DunKnight Telecom Partners LLC; (iv)
DSL.net's failure to generate sufficient revenue, contain certain
discretionary spending, achieve certain other business plan
objectives, or obtain additional debt or equity financing could have a
material adverse effect on DSL.net's results of operations or
financial position, or cause it to restructure its operations to
further reduce operating costs or to cease operations or to sell all
or a portion of DSL.net's assets; (v) DSL.net's ability to maintain
compliance with the American Stock Exchange's continuing listing
requirements, which failure could adversely impact the pricing and
trading of DSL.net's common stock; (vi) regulatory, legislative and
judicial developments, which could adversely affect the way DSL.net
operates its business or increase its costs of operations; (vii)
competition; (viii) the marketplace's receptiveness to DSL.net's
offering of integrated voice and data services; (ix) DSL.net's ability
to recruit and retain qualified personnel; and (x) DSL.net's
dependence on third-party providers to supply it with local DSL and
T-1 facilities in areas where it has not deployed its own equipment.
Existing and prospective investors are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of
the date hereof. DSL.net undertakes no obligation, and disclaims any
obligation, to update or revise the information contained in this
press release, whether as a result of new information, future events
or circumstances or otherwise. For additional information regarding
these and other risks faced by DSL.net, see the disclosure contained
under "Risk Factors'' in DSL.net's Annual Report on Form 10-K for the
year ended December 31, 2004, which has been filed with the Securities
and Exchange Commission.
DSL.net is a trademark of DSL.net, Inc. Other company names may be
trademarks of their respective owners.