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Cable & Wireless America (CWA) to Sell Core Operations to an Affiliate of Gores
Technology Group, LLC
* Files Voluntary Chapter 11 Petitions to Facilitate Sale
RESTON, Va., Dec. 8 /PRNewswire-FirstCall/ -- Cable & Wireless USA Inc. and
Cable & Wireless Internet Services, Inc. (CWA), wholly-owned subsidiaries of
Cable and Wireless plc , today announced that they, together with their
subsidiaries, have entered into an asset purchase agreement with an affiliate of
Gores Technology Group, LLC (Gores) for the sale of their hosting and IP
solutions businesses. In accordance with the terms of this agreement and to
facilitate the sale transaction, CWA today filed voluntary petitions for
reorganization under Chapter 11 of the Bankruptcy Code. During the sale
transaction CWA will continue to operate and focus on its core competencies of
hosting and IP services while delivering uninterrupted customer service.
Under the terms of the Asset Purchase Agreement, which is subject to Bankruptcy
Court approval, an affiliate of Gores Technology Group, LLC will acquire
substantially all of the assets of CWA for $125 million. The offer from Gores
comprises $50 million in cash and $75 million in a note from Gores Technology,
in each case to be delivered on completion of a sale of the US Businesses to
Gores Technology. It is subject to closing adjustments based on business
performance targets which have been set for working capital, revenue and certain
overhead expenses. Although the Purchase Price could be reduced if CWA does not
achieve these targets, under the terms of the Asset Purchase Agreement, it
cannot be reduced to less than $50 million. The Purchase Price from this
process will be applied to satisfy outstanding liabilities of CWA in accordance
with the US Bankruptcy Code. In accordance with Section 363 of the Bankruptcy
Code, qualifying bidders will have an opportunity to submit higher and better
offers through a court-supervised competitive bidding process.
CWA also announced today that John S. Dubel has recently joined the US business
as chief executive officer along with Eric A. Simonsen, who joins the US
business as chief restructuring officer and chief financial officer. Both are
principals of AlixPartners LLC. Mr. Dubel and Mr. Simonsen have extensive
experience in restructuring and turnaround services for organizations such as
WorldCom, Acterna and other Fortune 500 companies.
Continuous Customer Service
"Today's actions provide a clear path to a much stronger organization," stated
John S. Dubel, CWA's new chief executive officer. "Fulfilling the needs of our
customers remains our number one objective, and this sale represents a very
positive outcome for them. Throughout the sale process, continuity of service
will be maintained for our customers," Mr. Dubel stated. "CWA's products and
market position are strong, its technology is leading-edge, and there is
significant value in the core business. That is why we determined that a sale
of the business was in the best interests of all CWA's constituents and would
support the continued development of the business in an expanding market going
forward."
New Financing Secured
CWA also announced that it has received a commitment for up to $100 million in
debtor-in-possession (DIP) financing from Cable and Wireless plc, subject to
Bankruptcy Court approval. The DIP financing will be used to maintain
uninterrupted business operations through the completion of the sale
transaction. "With the availability of up to $100 million in DIP financing our
customers and employees should be reassured that we will continue business as
usual through the completion of the sale transaction," said Clint Heiden,
executive vice president of sales for CWA.
Streamlining Operations
Through the Chapter 11 and sale transaction processes CWA will be taking further
cost reduction steps. The measures include network consolidation and
rationalization, contract renegotiations and the continuation of previously
announced headcount reductions.
Over the past year CWA has successfully implemented a series of initiatives to
reduce costs and streamline operations, including headcount reductions and the
closure of eight underutilized data centers while successfully migrating
customers to the 15 remaining data centers. Pre- exceptional operating losses
were reduced by 100 million pounds Sterling and free cash outflow by 156 million
pounds Sterling compared to the second half of 2002/03.
Background
Following a strategic review of all its businesses, on June 4, 2003, Cable and
Wireless plc announced its decision to withdraw from the US domestic market.
Cable and Wireless plc fully supports and endorses the decision of the Board of
CWA to enter into the sale agreement and to commence proceedings under Chapter
11.
CWA with their subsidiaries filed voluntary petitions for reorganization under
Chapter 11 of the Bankruptcy Code in the US Bankruptcy Court for the District of
Delaware in Wilmington. The filing entities include Cable & Wireless USA Inc.,
Cable & Wireless Internet Services, Inc., Cable & Wireless USA of Virginia,
Inc., Exodus Communications Real Property I, LLC, Exodus Communications Real
Property Managers I LLC and Exodus Communications Real Property I, LP.
Cable & Wireless America (CWA) is among the leading providers of complex hosting
and IP solutions for global enterprises, counting 40% of the Fortune 100 among
their customers. Their portfolio of services includes a wide range of flexible
and secure IP connectivity and networking solutions along with complete and
secure infrastructure to support complex web hosting. CWA is part of the Cable
& Wireless group, whose principal operations are in the United Kingdom,
continental Europe, the United States, Japan, the Caribbean, Panama, the Middle
East and Macau.
For more information about CWA, go to http://www.cwusa.com/ for Chapter 11
information.
About Cable and Wireless plc
Cable & Wireless is one of the world's leading international communications
companies. It provides voice, data and IP (Internet Protocol) services to
business and residential customers, as well as services to other telecoms
carriers, mobile operators and providers of content, applications and internet
services.
Cable & Wireless' principal operations are in the United Kingdom, continental
Europe, the United States, Japan, the Caribbean, Panama, the Middle East and
Macau.
For more information about Cable and Wireless plc, go to http://www.cw.com/
About Gores Technology Group, LLC
Gores Technology Group, LLC ("Gores") is a private investment firm focused on
the technology and telecommunications sectors. The firm combines the seasoned M
& A team of a traditional financial buyer with the operational expertise and
detailed due diligence capabilities of a strategic buyer. Gores has a long
standing record of creating sustainable value in its portfolio companies by
focusing on customers and employees, supporting management with operational
expertise and providing the capital required for growth. Headquartered in Los
Angeles, California, Gores maintains offices in Boulder, Colorado; New York, New
York; London, United Kingdom; and Zurich, Switzerland. (http://www.gores.com/)
DATASOURCE: Cable & Wireless
CONTACT: U.S. Media, Laurie Probst or Chad Couser, both of Cable &
Wireless USA Inc., +1-703-292-2288
Web site: http://www.gores.com/
Web site: http://www.cwusa.com/
Web site: http://www.cw.com/