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Strategies & Market Trends : Sharck Soup
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To: Sharck who started this subject10/5/2001 8:11:54 AM
From: Jim Spitz  Read Replies (1) of 37746
 
Wam!Net closes on $100 million credit line


Published Oct 5 2001

Wam!Net Inc. has closed on a $100 million credit line from
affiliates of Cerberus Capital Management, a New York
City-based private investment firm that specializes in
financing distressed companies.

The financing deal was announced in July and approved by
Wam!Net's bondholders in August.

Wam!Net, an Eagan-based provider of high-speed data and
consulting services, has racked up net losses of $600 million
since its founding in 1994, and the firm's accountants recently
warned that the company would be forced to go out of business
without new financing.

Wam!Net executives said the line of credit, combined with
cost-cutting efforts and revenue from a contract to build a
computer network for 300 Navy and Marine Corps bases, will
help the company reach profitability in 2002.

But the financing comes at a steep price. The interest rate is 35
percent, and the total debt will be $115 million. In addition, the
lenders will be entitled to convert a portion of the loans into 49
percent of the stock of Wam!Net. A conversion also would
entitle Cerberus and its affiliates to receive nearly half the
dividends from Wam!Net's Navy and Marine Corps project.

-- Staff report

© Copyright 2001 Star Tribune. All rights reserved.
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