Savvis and MoneyLine Sign $122m Networking Services Agreement

📅 August 27, 2001 - Savvis Communications Corp.(savvis.com), a global network services provider, announced today that it has entered into an agreementwith MoneyLine Network, Inc. (moneyline.com), for afive-year, minimum $122 million contract to providenetworking services to the 7,000 client connectionsthat MoneyLine will acquire from Bridge InformationSystems (bridge.com).

MoneyLine, which was announced today as the winningbidder for the global operations of Bridge's Teleratesubsidiaries, plus the Bridge information businessesin Europe and Asia and the Bridge Trading RoomServices product line, is a leading provider of hostedInternet-based transactional services, real-time andhistorical content, and applications to financialprofessionals.
"MoneyLine's acquisition of the global Teleratebusiness is the last major step in the restructuringof Bridge Information Systems," said Rob McCormick,chairman and CEO of Savvis. "Our agreements with thewinning bidders, MoneyLine and Reuters, provide Savviswith a much stronger, more diverse, and profitablecustomer base."
Commenting on the financial impact to Savvis of theMoneyLine agreement, CFO David Frear said, "Once theMoneyLine and Reuters acquisitions of Bridge assetsare completed, Savvis will have replaced the Bridgerevenue stream, which approximates $14 million permonth, with a revenue stream of approximately $16million per month. Moreover, this revenue will be moreprofitable than the contract we had with Bridge."
In light of Savvis' previously announced five-year,$366 million networking services agreement withReuters, which is MoneyLine's primary competitor,MoneyLine and its investors have indicated theirintent to migrate to their own network. As thistransition occurs, MoneyLine will compensate Savvis upto $22 million to acquire the customer premisesequipment and switches, which Savvis currently uses tosupport this customer base. In the process, MoneyLinewill also assume payment responsibility for all localloop costs, thereby negating Savvis' direct costs tosupport these customers. Savvis will maintain on-netconnectivity to these 7,000 financial servicesclients, which are being acquired by MoneyLine, andare currently part of Savvis' Financial Xchangeservice.
McCormick said, "We understood the competitivebusiness concerns of MoneyLine, so we structured anagreement that allows MoneyLine to accomplish itslong-term goal but is financially beneficial to Savvisin the first three years. MoneyLine and Savvis arecommitted to working together to ensure a seamlesscustomer transition over the next five years."
The $122 million agreement with Savvis will takeeffect when MoneyLine completes its acquisition of theBridge assets, which is expected in September. In themeantime, Savvis will continue to provide service tothese 7,000 customers under its contract with Bridge.
"While this contract commitment calls for MoneyLine tospend a minimum of $63 million, $30 million and$7million in the first 3 years, we expect the billedamounts to be 10 to15% higher, based on the actualvolume of the business," said Frear. "In years 4 and5, revenue is anticipated to be approximately $5-6million annually for client connections in the U.S.and associated costs of supporting the MoneyLineinfrastructure."
The $122 million agreement with Savvis will takeeffect when MoneyLine completes its acquisition of theBridge assets, which is expected in September. In themeantime, Savvis will continue to provide service tothese 7,000 customers under its contract with Bridge.