Florham Park, NJ -- Global Crossing (NASDAQ: GLBC) announced today that it has entered into a purchase agreement to sell its small business group (SBG) to Matrix Telecom®, a Platinum Equity company. Under the agreement, Global Crossing will receive $40.5 million in gross cash proceeds for SBG. In addition, Global Crossing and Matrix have entered into a long term carrier services agreement under which Global Crossing will offer its full suite of voice, data and IP services to Matrix. The sale is subject to regulatory approval and is expected to close during the third quarter of 2005.
Global Crossing expects approximately $35 million in net cash proceeds from the transaction after giving effect to estimated purchase price adjustments, the payment of certain fees and the deduction of certain retained liabilities.
In addition to the purchase agreement, Global Crossing and Matrix Telecom, a telecommunications provider to the small- and medium-sized enterprise market, have entered into a long-term carrier services agreement, under which Global Crossing will provide to Matrix wholesale voice, data and IP services. Revenues under this carrier services agreement are in addition to the cash proceeds mentioned above.
“Since our primary focus is providing converged communications services to global enterprises and carriers, the sale of SBG allows us to concentrate on our core business,” said John Legere, Global Crossing’s chief executive officer. “I am immensely proud of the team of dedicated employees who are part of serving this set of customers and know that they will play a key role in Matrix’s continued success. We’re thankful to Platinum Equity for their diligence and hard work throughout this transaction, and we look forward to providing communications services and support to Matrix throughout the transition of SBG.”
SBG is a provider of voice and data products to an estimated 30,000 small- to medium-sized business enterprises in the U.S., which have remained customers of SBG for an average of more than seven years. SBG’s current product offering includes switched and dedicated voice services and data applications.
Matrix Telecom is one of 21 operating companies in the portfolio of Platinum Equity, a global acquisition firm based in Los Angeles and headed by CEO Tom Gores.
“We are very excited to bring SBG and Matrix together,” said Mr. Gores. “The two businesses complement one another extremely well, and their integration will create value and enhance the capabilities of both. The combination should be welcome news to customers, employees and business partners of both SBG and Matrix.”
The Blackstone Group served as a financial advisor to Global Crossing on the transaction.
In October 2004, Global Crossing announced that it was focusing its operations to better capitalize on its IP network and capabilities. The company’s plan includes concentrating on global enterprise offerings, new carrier data offerings and additional means of distributing its suite of IP capabilities to end-users. Also as part of this initiative, Global Crossing announced that it is de-emphasizing certain non-strategic areas of its business, including the small- to medium-sized enterprise space.
ABOUT MATRIX TELECOM
Matrix Telecom® Inc., a Platinum Equity company, is a fully integrated, facilities-based telecommunications carrier providing premium quality voice and data services to a nationwide customer base. Headquartered in Dallas, Texas, Matrix Telecom offers a complete line of voice, data, and Voice over IP products servicing the residential and business markets. Matrix Telecom offers wholesale products direct to other carriers, as well as retail products distributed through resellers and agents. Matrix Telecom is committed to providing customized communication services that exceed customers’ expectations for quality, value, and reliability. For more information, please visit the Matrix Telecom website at www.matrixvalue.com.
ABOUT PLATINUM EQUITY
Platinum Equity (www.platinumequity.com) is a global M&A&O® firm specialized in the merger, acquisition, and operation of mission-critical services and solutions companies. Since its founding in 1995, the firm has completed more than 65 transactions, building a diverse portfolio of companies with nearly 40,000 employees, more than 600,000 customer sites, and a multi-billion dollar revenue base. Platinum Equity in 2004 was named the 32nd largest private company in the United States by Forbes magazine.
ABOUT GLOBAL CROSSING
Global Crossing (NASDAQ: GLBC) provides telecommunications solutions over the world's first integrated global IP-based network. Its core network connects more than 300 cities and 30 countries worldwide, and delivers services to more than 500 major cities, 50 countries and 6 continents around the globe. The company’s global sales and support model matches the network footprint and, like the network, delivers a consistent customer experience worldwide.
Global Crossing IP services are global in scale, linking the world’s enterprises, governments and carriers with customers, employees and partners worldwide in a secure environment that is ideally suited for IP-based business applications, allowing e-commerce to thrive. The company offers a full range of managed data and voice products including Global Crossing IP VPN Service, Global Crossing Managed Services and Global Crossing VoIP services, to more than 40 percent of the Fortune 500, as well as 700 carriers, mobile operators and ISPs.
Please visit www.globalcrossing.com for more information about Global Crossing.
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SAFE HARBOR STATEMENT
Statements made in this press release that state the company's intentions, beliefs, expectations, or predictions for the future are forward-looking statements. These statements contain words such as "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," "will," "seek," or similar expressions. Such statements are subject to known and unknown risks, uncertainties and other factors that could cause the actual results to differ materially from those contemplated by the statements, including the conditioning of the company's continued listing on the NASDAQ National Market on its timely filing with the SEC of all periodic reports for all reporting periods ending on or prior to September 30, 2005; the company's history of substantial operating losses and the fact that, in the near term, funds from operations will not satisfy cash requirements; legal and contractual restrictions on the payment of dividends and the inter-company transfer of funds by the company's subsidiaries, including restrictions under the senior secured notes indenture applicable to the company's primary operating subsidiary in the UK; the likelihood that the prices the company charges for its services will continue to decrease; the company's ability to continue to connect its network to incumbent carriers' networks or maintain Internet peering arrangements on favorable terms; the success of the company's business realignment plan and the realization of anticipated cost savings; the consequences of any inadvertent violation of the company's Network Security Agreement with the U.S. Government; the impact of actual and potential customers' bankruptcies on the company's sales prospects and results of operations; increased competition and pricing pressures resulting from technology advances and regulatory changes; competitive disadvantages relative to competitors with superior resources; the impact on the company's competitiveness of its technology choices; the company's dependence on third parties for many functions; political, legal and other risks due to the company's substantial international operations; and other risks referenced from time to time in the company's filings with the Securities and Exchange Commission. The company undertakes no duty to update information contained in this press release or in other public disclosures at any time.