Primus Completes Arbinet Acquisition
March 01 2011 - 6:00AM
Marketwired
Primus Telecommunications Group, Incorporated (PTGi) (OTCBB: PMUG),
a global facilities-based integrated provider of advanced
telecommunications products and services, announced today that it
has completed its acquisition of Arbinet Corporation (NASDAQ:
ARBX), a leading provider of wholesale telecom exchange services to
carriers in an all-stock transaction. Pursuant to the definitive
merger agreement dated November 10, 2010, which was further amended
on December 14, 2010, it is anticipated that Arbinet stockholders
will receive approximately 0.5817 shares of Primus common stock for
each share of Arbinet common stock that they hold. Arbinet
stockholders (by virtue of holding Arbinet common stock immediately
prior to the effective time of the merger) now own approximately
25% of the outstanding shares of Primus common stock. The number of
Primus shares outstanding, on a pro forma basis for the completion
of the transaction, is 13,108,380.
Peter D. Aquino, Chairman, President and Chief Executive
Officer, stated, "The combination of Primus' International Carrier
Services group with Arbinet's thexchange(SM) creates a unit with
over $500 million in annual revenue. This enhances our
competitiveness and our ability to serve the diverse needs of our
customers. The new business unit called PTGi International Carrier
Services is uniquely positioned to fulfill customers' wholesale
needs regardless of their sourcing preferences. We are now
implementing our plan of integration, which we expect to be
substantially completed over the next 12 months. We anticipate
accretive cost synergies of approximately $3 million in 2011 and
approximately $7 million in 2012. We continue to expect this to be
a win for our customers and employees, and to generate additional
value for stockholders. We welcome Arbinet's employees and its
stockholders to PTGi."
Primus is now integrating Arbinet into Primus' International
Carrier Services group, adding over $300 million in annual revenue,
and bringing Primus' total consolidated annual run rate revenue to
over $1 billion. The combination of Primus' International Carrier
Services group with Arbinet is expected to enhance global
competitive positioning, allowing customers to access more global
routes at competitive rates and diversifying Primus' international
voice and data product portfolio of services across all existing
customer segments. Primus will become the only major global
provider to offer customers the option either to acquire direct
international connections through traditional interconnect
arrangements or to manage their access needs through Arbinet's
voice trading exchange (thexchange(SM)). Primus also expects that
the combination will improve gross margins and resulting EBITDA by
eliminating operating redundancies and adding the benefits of
increased scale by adding enhanced global voice and data services,
including IP transit and peering and combining complementary
strengths, including an expanded global footprint, additional sales
presence, and increased coverage in Asia, Latin America, and
Eastern Europe.
In addition, Primus has named John Melick as President
International Carrier Services, who will run the combined wholesale
operations.
About Primus Primus Telecommunications
Group, Incorporated is a leading provider of advanced communication
solutions, including, traditional and IP voice, data, mobile
services, broadband Internet, collocation, hosting, and outsourced
managed services to business and residential customers in the
United States, Canada, Australia, and Brazil. Primus is also one of
the leading international wholesale service providers to fixed and
mobile network operators worldwide. Primus owns and operates its
own global network of next-generation IP soft switches, media
gateways, hosted IP/SIP platforms, broadband infrastructure, fiber
capacity, and data centers located in Canada, Australia, and
Brazil. Founded in 1994, Primus is headquartered in McLean,
Virginia.
Non-GAAP Financial Measures This release
includes certain non-GAAP financial measures as defined under the
rules of the Securities and Exchange Commission, or the SEC; such
non-GAAP financial measures include Adjusted EBITDA and Free Cash
Flow. Primus provides reconciliations of these measures to the most
directly comparable GAAP measures in its press releases, which are
available on our web site at www.ptgi.com. Additionally,
information regarding the purpose and use for these non-GAAP
financial measures is set forth in the Company's quarterly press
releases and filings made with the SEC, which are available on our
web site.
Forward-Looking Statements This press
release includes "forward-looking statements" as defined by the
SEC. All statements, other than statements of historical fact,
included herein that address activities, events or developments
that Arbinet or Primus expects, believes or anticipates will or may
occur in the future, including anticipated benefits and other
aspects of the merger, are forward-looking statements. These
forward-looking statements are subject to risks and uncertainties
that may cause actual results to differ materially. Risks and
uncertainties that could affect forward-looking statements include,
but are not limited to, the following: the possibility that the
expected synergies from the proposed merger will not be realized,
or will not be realized within the anticipated time period; the
risk that Primus' and Arbinet's businesses will not be integrated
successfully; the possibility of disruption from the merger making
it more difficult to maintain business and operational
relationships; any actions taken by either of the companies,
including, but not limited to, restructuring or strategic
initiatives (including capital investments or asset acquisitions or
dispositions); the ability to service substantial indebtedness; the
risk factors or uncertainties described from time to time in
Arbinet's filings with the SEC; and the risk factors or
uncertainties described from time to time in Primus' filings with
the SEC (including, among others, those listed under captions
titled "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Liquidity and Capital Resources --
Short- and Long-Term Liquidity Considerations and Risks;" "--
Special Note Regarding Forward-Looking Statements;" and "Risk
Factors" in Primus' annual report on Form 10-K and quarterly
reports on Form 10-Q) that cover matters and risks including, but
not limited to: (a) a continuation or worsening of global
recessionary economic conditions, including the effects of such
conditions on our customers and our accounts receivables and
revenues; (b) the general fluctuations in the exchange rates of
currencies, particularly any strengthening of the United States
dollar relative to foreign currencies of the countries where we
conduct our foreign operations; (c) the possible inability to raise
additional capital or refinance indebtedness when needed, or at
all, whether due to adverse credit market conditions, our credit
profile or otherwise; (d) a continuation or worsening of turbulent
or weak financial and capital market conditions; (e) adverse
regulatory rulings or changes in the regulatory schemes or
requirements and regulatory enforcement in the markets in which we
operate and uncertainty regarding the nature and degree of
regulation relating to certain services; and (f) successful
implementation of cost reduction efforts. Readers are cautioned not
to place undue reliance on forward-looking statements, which speak
only as of their dates. Except as required by law, Primus does not
intend to update or revise its forward-looking statements, whether
as a result of new information, future events or otherwise.
Investor Contact: Primus Richard Ramlall SVP Corporate
Development and Chief Communications Officer 703-748-8050
ir@ptgi.com Lippert/Heilshorn & Assoc., Inc. Carolyn Capaccio
212-838-3777 ccapaccio@lhai.com
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