[Level 3 Communications and XCOM Technologies Sign Definitive Merger Agreement]
OMAHA, Neb., April 6 /PRNewswire/ -- Level 3 Communications, Inc. (NASDAQ:LVLT) and XCOM Technologies, Inc., a competitive local exchange carrier (CLEC) and communications software developer headquartered in Cambridge, Massachusetts, today announced that the two companies have executed a definitive agreement and plan of merger. Under the terms of the agreement, which is a stock for stock transaction at a fixed exchange rate with no collars, approximately 2.6 million shares of Level 3 common stock will be exchanged for all of the common stock of XCOM at the time of closing. At Level 3's closing price on Friday ($62.50), the merger consideration for XCOM is approximately $165 million, exclusive of warrants and options. The merger is expected to close during the second quarter of 1998.
Consummation of the merger is subject to the satisfaction of certain conditions, including the expiration or termination of any applicable waiting periods under the Hart-Scott-Rodino Act and the absence of certain material adverse changes. The closing of the merger is expected to occur as soon as practicable after satisfaction of these conditions.
"This is an exciting and important merger for both companies," said James Q. Crowe, president and CEO of Level 3. "XCOM has created and developed a new and important technology. XCOM holds exclusive proprietary rights to technology which provides key components of the 'gateway' or 'bridge' necessary to fully interconnect the 100-year-old public switched telephone network (PSTN) to new networks based on the Internet Protocol (IP) - such as that being built by Level 3.
"This bridge will allow Level 3 to offer a broad range of communications services, including voice and fax services, to customers at lower cost and, over time, with new features and enhancements," said Crowe.. "Moreover, customers will be able to enjoy these benefits using their existing telephone equipment and without changing dialing patterns or adding additional devices."
"We are particularly looking forward to working with XCOM's entrepreneurial management team. We have tremendous regard for their talent and have discovered that we think alike. They will play a major role in the combined company," said Crowe.
"We are tremendously excited by the prospect of joining forces with Level 3," said David F. Callan, XCOM president & CEO. "They know what we have accomplished and what we can accomplish together. Level 3's capital resources, along with the depth and experience of their management team are exactly what we need to expand our business to the national level."
"Both companies are aggressively embracing and helping to shape the new world of IP-based technology and communications. Our cultures and views are virtually the same. Both companies' executives come from entrepreneurial backgrounds with successful track records in starting up and growing companies to very substantial size and success in their markets," said Callan. "I see a great match between Level 3 and XCOM. This combination of technology, resources and management positions us to be an industry leader."
XCOM Operating Network Gives Level 3 A Jump-Start In Northeast Corridor
In addition to contributing important telephone network-to-IP network bridge technology, XCOM brings a fast growing competitive local exchange business to the combined companies. XCOM now has 10,000 local access lines and provides services in Boston and Eastern Massachusetts. The company has regulatory co-carrier authorizations from five states, with six others pending.
"What XCOM has accomplished as a competitive local exchange carrier is remarkable. Starting in the most competitive market in the country - the local telecommunications market in the Northeast corridor of the U.S. - they have not only been successful, but became profitable after five months with current monthly revenue of $3.2 million. The combined companies will bring the same successful formula from Boston to New York, New Jersey, Maryland, Virginia, the District of Columbia, New Hampshire and Rhode Island over the course of the year," said Crowe.
"This existing service base gives us an operating environment to evaluate, analyze and test the telephone network-to-IP network bridge technology. It also enables Level 3 to serve customers in the most dense - and potentially lucrative -- market in the country, as we continue to build our own networks to replace leased infrastructure," said Crowe.
About XCOM Technologies, Inc.
XCOM, "the data phone company," is a competitive local exchange carrier (CLEC) and communications software development company providing local data and voice services. Founded in 1996, XCOM offers virtual points of presence (POP) to Internet service providers and remote access solutions to corporate customers on a regional basis. Its World Wide Web address is
xcom.net.
About Level 3 Communications, Inc.
Level 3 is a communications and information services company building an advanced Internet Protocol (IP) based network across the U.S. Level 3 is the first company to combine both local and long distance IP networks connecting customers end-to-end across the U.S. Level 3's initial optical fiber network will be substantially completed in phases over the next 36 months. In the interim, Level 3 has signed an agreement to lease a national network over which it will be able to offer advanced IP-based services beginning in the third quarter of 1998. Level 3 will focus primarily on the business market using its network to provide a full range of communications services -- including local, long distance and data transmission as well as other enhanced services and Internet access services. Plans also call for the company to expand internationally. Level 3's common stock is traded on the Nasdaq National Market under the symbol LVLT. Its World Wide Web address is l3.com.
SOURCE Level 3 Communications, Inc.
-0- 04/06/98
/CONTACT: Media, Josh Howell, 402-943-1309, Steve Ingish, 402-943-1337, or Investors: Julie Stangl, 402-943-1310, all of Level 3 Communications; or David Powers of XCOM Technologies, Inc., 617-500-0106/ |
