Qwest Communications to Purchase 14 Million Shares of KPNQwest [...]
Qwest Communications to Purchase 14 Million Shares of KPNQwest From KPN
📅 - Qwest Communications International Inc. (qwest.com 👉 Total Reviews: 1
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👈 Official Responses: 0 -> lumen.com), the broadband communications company, announced an agreement with Koninklijke KPN N.V., the Dutch telecommunications company, for Qwest to purchase from KPNapproximately 14 million shares of KPNQwest N.V. for $4.58 per share andAnschutz Company, Qwest's principal shareowner, to purchase an additionalsix million KPNQwest shares at the same price.
Separately, KPNQwest announced plans for a major European expansion with theacquisition of Global TeleSystems, Inc.'s (GTS) Ebone and Central Europebusinesses for approximately $580 million (645 million euro), including theassumption of debt. At the completion of the acquisition, KPNQwest will havea $450 million (500 million euro) credit facility to fully fund the combinedcompany until it becomes free cash flow positive in the fourth quarter of2003.
"Owning a larger stake in KPNQwest is a well-timed strategic opportunity asKPNQwest significantly expands its pan-European leadership position; fullyfunds its business plan after a major acquisition, and accelerates free cashflow," said Qwest Chairman and CEO Joseph P. Nacchio, who also serves aschairman of the KPNQwest board.
"The changes in the governance of KPNQwest eliminate a complicated structurethat was useful when we set up the joint venture in late 1998," Nacchioadded. "We expect the new structure will free KPNQwest to respond faster tochanging market conditions and accelerate its growth."
After Qwest purchases the KPN shares, the KPNQwest supervisory board willconsist of six members. Qwest will nominate three directors, KPN willnominate one director and two directors will be independent of both Qwestand KPN. Qwest will retain its special rights to approve certain strategicdecisions of KPNQwest.
KPN's equivalent special approval rights will be eliminated, but KPN willretain certain minority shareholder protection rights. The obligations ofQwest and KPN to not compete with KPNQwest in Europe will be terminated.However, if KPN engages in certain competitive activities, KPN's minorityshareholder protection rights will be eliminated, and KPN's nominee on theKPNQwest supervisory board must be replaced by someone who is not affiliatedwith KPN.
There are currently approximately 451 million shares of KPNQwestoutstanding. As part of the purchase, the voting power of each Class A and Bshare will be reduced from 10 votes per share to one vote per share, whichis the same as the voting power of each Class C share. After the purchase,Qwest will hold 214 million Class B shares, or about 47.5% of the votingpower, and KPN will hold 180 million Class A shares, or about 40% of thevoting power.
Current restrictions on Qwest's sale of its KPNQwest shares will beeliminated, except that Qwest will grant to KPN certain "tag-along" rightsif Qwest were to sell any shares. Current restrictions on KPN's sale ofKPNQwest shares will be modified to permit KPN to sell these shares inunderwritten public offerings, in private transactions to institutionalpurchasers who agree to be subject to the sale restrictions or, beginning in2003, in market transactions, subject to significant volume limitations. Thebuyer will receive publicly-held Class C shares. The "buy-sell" arrangementsin the joint venture agreement among the parties will also be eliminated.
Neither Qwest nor KPN will have any obligation to make capital contributionsto KPNQwest. Qwest will continue to account for its proportionate share ofKPNQwest's profit or loss under the equity method of accounting.
As part of the share purchase transaction, KPN will grant to Qwest an optionto purchase some or all of KPN's shares in KPNQwest in March 2002. Qwest isunder no obligation to exercise the option, which is assignable to thirdparties. Until the option expires, any permitted sale of shares by KPN willbe subject to a right of first refusal by Qwest.
Qwest expects to close the purchase of KPN shares before December 31, 2001.The share purchase is subject to several conditions, including the executionof definitive transaction documents, consents of workers' councils of KPNand KPNQwest, antitrust approval in the United States and Europe, andapproval by KPNQwest shareholders of certain amendments to the KPNQwestarticles of association.
🙌 Average Rating: 1 / 10
👍 Good Reviews: 0
👎 Bad Reviews: 1
👈 Official Responses: 0 -> lumen.com), the broadband communications company, announced an agreement with Koninklijke KPN N.V., the Dutch telecommunications company, for Qwest to purchase from KPNapproximately 14 million shares of KPNQwest N.V. for $4.58 per share andAnschutz Company, Qwest's principal shareowner, to purchase an additionalsix million KPNQwest shares at the same price.
Separately, KPNQwest announced plans for a major European expansion with theacquisition of Global TeleSystems, Inc.'s (GTS) Ebone and Central Europebusinesses for approximately $580 million (645 million euro), including theassumption of debt. At the completion of the acquisition, KPNQwest will havea $450 million (500 million euro) credit facility to fully fund the combinedcompany until it becomes free cash flow positive in the fourth quarter of2003.
"Owning a larger stake in KPNQwest is a well-timed strategic opportunity asKPNQwest significantly expands its pan-European leadership position; fullyfunds its business plan after a major acquisition, and accelerates free cashflow," said Qwest Chairman and CEO Joseph P. Nacchio, who also serves aschairman of the KPNQwest board.
"The changes in the governance of KPNQwest eliminate a complicated structurethat was useful when we set up the joint venture in late 1998," Nacchioadded. "We expect the new structure will free KPNQwest to respond faster tochanging market conditions and accelerate its growth."
After Qwest purchases the KPN shares, the KPNQwest supervisory board willconsist of six members. Qwest will nominate three directors, KPN willnominate one director and two directors will be independent of both Qwestand KPN. Qwest will retain its special rights to approve certain strategicdecisions of KPNQwest.
KPN's equivalent special approval rights will be eliminated, but KPN willretain certain minority shareholder protection rights. The obligations ofQwest and KPN to not compete with KPNQwest in Europe will be terminated.However, if KPN engages in certain competitive activities, KPN's minorityshareholder protection rights will be eliminated, and KPN's nominee on theKPNQwest supervisory board must be replaced by someone who is not affiliatedwith KPN.
There are currently approximately 451 million shares of KPNQwestoutstanding. As part of the purchase, the voting power of each Class A and Bshare will be reduced from 10 votes per share to one vote per share, whichis the same as the voting power of each Class C share. After the purchase,Qwest will hold 214 million Class B shares, or about 47.5% of the votingpower, and KPN will hold 180 million Class A shares, or about 40% of thevoting power.
Current restrictions on Qwest's sale of its KPNQwest shares will beeliminated, except that Qwest will grant to KPN certain "tag-along" rightsif Qwest were to sell any shares. Current restrictions on KPN's sale ofKPNQwest shares will be modified to permit KPN to sell these shares inunderwritten public offerings, in private transactions to institutionalpurchasers who agree to be subject to the sale restrictions or, beginning in2003, in market transactions, subject to significant volume limitations. Thebuyer will receive publicly-held Class C shares. The "buy-sell" arrangementsin the joint venture agreement among the parties will also be eliminated.
Neither Qwest nor KPN will have any obligation to make capital contributionsto KPNQwest. Qwest will continue to account for its proportionate share ofKPNQwest's profit or loss under the equity method of accounting.
As part of the share purchase transaction, KPN will grant to Qwest an optionto purchase some or all of KPN's shares in KPNQwest in March 2002. Qwest isunder no obligation to exercise the option, which is assignable to thirdparties. Until the option expires, any permitted sale of shares by KPN willbe subject to a right of first refusal by Qwest.
Qwest expects to close the purchase of KPN shares before December 31, 2001.The share purchase is subject to several conditions, including the executionof definitive transaction documents, consents of workers' councils of KPNand KPNQwest, antitrust approval in the United States and Europe, andapproval by KPNQwest shareholders of certain amendments to the KPNQwestarticles of association.
URL source: http://www.thewhir.com/marketwatch/qwest1023.cfm
Company: qwest [qwest.com -> lumen.com]
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