Cable & Wireless America (CWA) to Sell Core Operations to an Affiliate of Gores Technology Group, LLC
December 08 2003 - 2:34AM
PR Newswire (US)
Cable & Wireless America (CWA) to Sell Core Operations to an
Affiliate of Gores Technology Group, LLC * Files Voluntary Chapter
11 Petitions to Facilitate Sale RESTON, Va., Dec. 8
/PRNewswire-FirstCall/ -- Cable & Wireless USA Inc. and Cable
& Wireless Internet Services, Inc. (CWA), wholly-owned
subsidiaries of Cable and Wireless plc , today announced that they,
together with their subsidiaries, have entered into an asset
purchase agreement with an affiliate of Gores Technology Group, LLC
(Gores) for the sale of their hosting and IP solutions businesses.
In accordance with the terms of this agreement and to facilitate
the sale transaction, CWA today filed voluntary petitions for
reorganization under Chapter 11 of the Bankruptcy Code. During the
sale transaction CWA will continue to operate and focus on its core
competencies of hosting and IP services while delivering
uninterrupted customer service. Under the terms of the Asset
Purchase Agreement, which is subject to Bankruptcy Court approval,
an affiliate of Gores Technology Group, LLC will acquire
substantially all of the assets of CWA for $125 million. The offer
from Gores comprises $50 million in cash and $75 million in a note
from Gores Technology, in each case to be delivered on completion
of a sale of the US Businesses to Gores Technology. It is subject
to closing adjustments based on business performance targets which
have been set for working capital, revenue and certain overhead
expenses. Although the Purchase Price could be reduced if CWA does
not achieve these targets, under the terms of the Asset Purchase
Agreement, it cannot be reduced to less than $50 million. The
Purchase Price from this process will be applied to satisfy
outstanding liabilities of CWA in accordance with the US Bankruptcy
Code. In accordance with Section 363 of the Bankruptcy Code,
qualifying bidders will have an opportunity to submit higher and
better offers through a court-supervised competitive bidding
process. CWA also announced today that John S. Dubel has recently
joined the US business as chief executive officer along with Eric
A. Simonsen, who joins the US business as chief restructuring
officer and chief financial officer. Both are principals of
AlixPartners LLC. Mr. Dubel and Mr. Simonsen have extensive
experience in restructuring and turnaround services for
organizations such as WorldCom, Acterna and other Fortune 500
companies. Continuous Customer Service "Today's actions provide a
clear path to a much stronger organization," stated John S. Dubel,
CWA's new chief executive officer. "Fulfilling the needs of our
customers remains our number one objective, and this sale
represents a very positive outcome for them. Throughout the sale
process, continuity of service will be maintained for our
customers," Mr. Dubel stated. "CWA's products and market position
are strong, its technology is leading-edge, and there is
significant value in the core business. That is why we determined
that a sale of the business was in the best interests of all CWA's
constituents and would support the continued development of the
business in an expanding market going forward." New Financing
Secured CWA also announced that it has received a commitment for up
to $100 million in debtor-in-possession (DIP) financing from Cable
and Wireless plc, subject to Bankruptcy Court approval. The DIP
financing will be used to maintain uninterrupted business
operations through the completion of the sale transaction. "With
the availability of up to $100 million in DIP financing our
customers and employees should be reassured that we will continue
business as usual through the completion of the sale transaction,"
said Clint Heiden, executive vice president of sales for CWA.
Streamlining Operations Through the Chapter 11 and sale transaction
processes CWA will be taking further cost reduction steps. The
measures include network consolidation and rationalization,
contract renegotiations and the continuation of previously
announced headcount reductions. Over the past year CWA has
successfully implemented a series of initiatives to reduce costs
and streamline operations, including headcount reductions and the
closure of eight underutilized data centers while successfully
migrating customers to the 15 remaining data centers. Pre-
exceptional operating losses were reduced by 100 million pounds
Sterling and free cash outflow by 156 million pounds Sterling
compared to the second half of 2002/03. Background Following a
strategic review of all its businesses, on June 4, 2003, Cable and
Wireless plc announced its decision to withdraw from the US
domestic market. Cable and Wireless plc fully supports and endorses
the decision of the Board of CWA to enter into the sale agreement
and to commence proceedings under Chapter 11. CWA with their
subsidiaries filed voluntary petitions for reorganization under
Chapter 11 of the Bankruptcy Code in the US Bankruptcy Court for
the District of Delaware in Wilmington. The filing entities include
Cable & Wireless USA Inc., Cable & Wireless Internet
Services, Inc., Cable & Wireless USA of Virginia, Inc., Exodus
Communications Real Property I, LLC, Exodus Communications Real
Property Managers I LLC and Exodus Communications Real Property I,
LP. Cable & Wireless America (CWA) is among the leading
providers of complex hosting and IP solutions for global
enterprises, counting 40% of the Fortune 100 among their customers.
Their portfolio of services includes a wide range of flexible and
secure IP connectivity and networking solutions along with complete
and secure infrastructure to support complex web hosting. CWA is
part of the Cable & Wireless group, whose principal operations
are in the United Kingdom, continental Europe, the United States,
Japan, the Caribbean, Panama, the Middle East and Macau. For more
information about CWA, go to http://www.cwusa.com/ for Chapter 11
information. About Cable and Wireless plc Cable & Wireless is
one of the world's leading international communications companies.
It provides voice, data and IP (Internet Protocol) services to
business and residential customers, as well as services to other
telecoms carriers, mobile operators and providers of content,
applications and internet services. Cable & Wireless' principal
operations are in the United Kingdom, continental Europe, the
United States, Japan, the Caribbean, Panama, the Middle East and
Macau. For more information about Cable and Wireless plc, go to
http://www.cw.com/ About Gores Technology Group, LLC Gores
Technology Group, LLC ("Gores") is a private investment firm
focused on the technology and telecommunications sectors. The firm
combines the seasoned M & A team of a traditional financial
buyer with the operational expertise and detailed due diligence
capabilities of a strategic buyer. Gores has a long standing record
of creating sustainable value in its portfolio companies by
focusing on customers and employees, supporting management with
operational expertise and providing the capital required for
growth. Headquartered in Los Angeles, California, Gores maintains
offices in Boulder, Colorado; New York, New York; London, United
Kingdom; and Zurich, Switzerland. (http://www.gores.com/)
DATASOURCE: Cable & Wireless CONTACT: U.S. Media, Laurie Probst
or Chad Couser, both of Cable & Wireless USA Inc.,
+1-703-292-2288 Web site: http://www.gores.com/ Web site:
http://www.cwusa.com/ Web site: http://www.cw.com/
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