Oct, 2001 : KPNQwest to acquire Global TeleSystems, Ebone

📅 October 22, 2001 - Global TeleSystems, Inc. announced that it has signed a definitive share purchase agreement with KPNQwest (kpnqwest.com).

Under the terms of the agreement, KPNQwest will acquire (i) GlobalTeleSystems Europe B.V. (gts.com), which owns and operates Ebone (ebone.com), Europe's leading broadband optical and IP network service provider; and (ii) GTS's Central European operating companies, which are the leading alternative provider of voice and data communications in Central Europe.
KPNQwest will acquire these companies through the issuance of approximatelyEUR210 million of new senior convertible bonds and the assumption of bankdebt and capital lease obligations upon closing.
Robert Amman, Chairman and Chief Executive Officer of GTS, commented: "GTSand KPNQwest make a formidable combination. We believe that this new companycan lead the data revolution in Europe. The many valuable facets of GTS -its assets, its customers, and most significantly, its talented people -will be a great addition to KPNQwest. We expect this new combined company tothrive."
Amman continued: "This transaction represents the completion of theconsensual restructuring process that we began late last year. As the totalconsideration from KPNQwest is far less than our outstanding bond liability,we greatly regret that no value can accrue to our preferred and commonshareholders. Given current market valuations, we nevertheless feel thatthis agreement represents a fair value for the operations and assets of GTSand presents the best opportunity to create as much value as possible forour bondholders while continuing to deliver on our commitments to customers,employees, suppliers and partners."
GTS has reached agreements with the informal committees representing theholders of GTS's and GTS Europe's publicly traded bonds with respect to theterms of the transaction with KPNQwest, and the allocation of KPNQwestSenior Convertible Notes. Approximately 67 per cent of the approximatelyEUR1.1 billion outstanding principal amount of the publicly traded SeniorNotes at GTS Europe, approximately 78 per cent of the approximately EUR116million outstanding principal amount of the Senior Notes at GTS, andapproximately 35 per cent of the approximately EUR362 million outstandingprincipal amount of Convertible Debentures issued by GTS have signedforbearance agreements, committing them to support the proposed transactionsubject to certain terms and conditions.
"The high level of participation and support demonstrated by the GTS and GTSEurope bondholders in the form of signed forbearance agreements demonstratesthe bondholders' collective support for the proposed transaction andallocation of value," commented Irwin Gold, Senior Managing Director ofHoulihan Lokey Howard & Zukin, financial advisor to GTS and GTS Europe.
To ensure the binding nature of the sale agreement on all bondholders, GTSexpects that the transaction will be effectuated through a "pre-arranged"court proceedings by GTS and GTS Europe under United States bankruptcy laws,and a corresponding application by GTS Europe for "surseance" and"deposition for composition" in the Netherlands. Approval of the U.S. planis subject to, among other things, acceptance by more than one-half innumber and two-thirds in dollar amount of voting bondholders in therequisite classes. Approval of the Dutch plan is subject to, among otherthings, approval by two-thirds in number and three-quarters in value of theGTS Europe bondholders participating in the proceedings. None of theoperating subsidiaries of GTS will be involved in either court proceedingand both the Dutch and US plans will call for all vendor claims of GTS'soperating subsidiaries to be paid in the normal course.
The transaction also may require approval by the European Commission, and isexpected to close during the first quarter of 2002.