Aug, 2001 : Flag Closes $300m Financing for North Asian Loop

📅 August 21, 2001 - Flag Telecom (flagtelecom.com), a leading, London-based network services provider and independent carriers' carrier, yesterday announced that Flag Asia Limited has secured financing for Flag North Asian Loop (FNAL) of up to $300 million under a syndicated credit facility, arranged by Westdeutsche Landesbank Girozentrale, New York (westlb.de).

"To ensure the project was executed on a fast track, we initially fundedFNAL completely from our own cash resources and presale proceeds fromLevel3," Ed McCormack, COO of Flag Telecom, said in a statement. "Thefacility therefore releases some of our own funding that we had previouslycommitted to the project. As a result, we have increased our cash resourcesto support future initiatives and to enhance liquidity in 2002 and beyond."
"The development of FNAL has been an important part of our network expansionplan and a major step in our strategy to develop a low-cost, scaleableglobal IP network," he continued. "FNAL will be a market leader, offeringcapacity to the Asian regional markets and leveraging our substantialoperational experience in the region."
The credit facility has been syndicated to international banks and is a 61/2 year project financing term facility at an interest rate of LIBOR plusbetween 225 to 325 basis points on drawn amounts. Under the terms of thefacility, Flag Telecom Holdings Limited will lend up to $100 million to itssubsidiary, which will be reduced if further external lenders are broughtinto the syndicate group. Westdeutsche acted as lead arranger,administration and security agent and Royal Bank of Scotland acted asdocumentation agent.
FNAL is the six fibre pair, multi-terabit, intra-Asian system beingdeveloped in association with Level3 Communications, Inc. (level3.com)announced in January this year. The Eastern leg of the system, linking HongKong to Japan, was developed by Level3 and was commissioned in June.City-to-city services between Hong Kong and Tokyo were initiated this monthand the Taiwan spur on this leg is progressing to schedule. Work on theWestern leg of the system, being developed by Flag Telecom and connectingHong Kong, Korea and Japan, is also progressing to schedule and in June itwas announced that an agreement had been reached with Korea Telecom to buildand operate the landing station at Pusan, Korea.
The fit out of PoPs in the cities served by the system and the establishmentof backhaul connections are in progress, with completion expected next year.Flag Telecom will manage and operate the entire system once integrated. FNALwill be more than 10,000 route kilometres in length and Flag Telecom andLevel 3 will each have three fibre pairs on the system. FNAL usesstate-of-the-art DWDM technology and is expected to offer a maximum capacityof 2.5- 3.8Tbps. This terabit technology is combined with SDH/SONETnetworking to provide customers with seamless city-to-city connectivity.