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Tuesday May 4, 7:22 am Eastern Time
Company Press Release
SOURCE: FirstLink Communications, Inc.
FirstLink Communications Signs Letter of Intent With Newman & Associates, Inc.
FirstLink to Receive $80 Million Financing as Part of Agreement And to Acquire GMAC Resident's Advantage
PORTLAND, Ore., May 4 /PRNewswire/ -- FirstLink Communications, Inc. (Nasdaq: FLCI - news, FLCIW - news), an integrated provider of telecommunications services to multi-family apartment and condominium complexes, today announced it has signed a letter of intent for an acquisition and financing agreement with an investor group led by Newman & Associates, Inc. (Newman). The Newman letter of intent will supersede the previously announced financing transaction with Peregrine Capital, Inc. (Peregrine). However, Peregrine will be a member of the Newman investor group.
Under terms of the letter of intent, Newman will arrange for $50 million in capitalization for a newly formed company, which has been formed for the purpose of acquiring U.S. OnLine Communications, Inc. (USOL) and the Tenant Services Division of GMAC Commercial Mortgage Corporation (GMACCM), known as ''GMAC Resident's Advantage.'' In connection with the proposed transaction, GMACCM also expects to enter into a marketing agreement with FirstLink, which will permit FirstLink to offer GMAC Resident's Advantage products and services to GMACCM's multi-dwelling unit (MDU) borrower clients. GMAC Resident's Advantage provides ancillary services to residents of MDUs under exclusive marketing agreements with property owners. According to GMAC Resident's Advantage, it currently has marketing agreements with MDUs in excess of 450,000 residential units.
Upon receiving shareholder approval, FirstLink will acquire the newly formed company for consideration comprised of $25 million of FirstLink preferred stock (convertible at $2.00 per share) and $25 million in mezzanine notes. Furthermore, Newman will arrange for an additional $30 million in senior debt financing for FirstLink in connection with the closing of the transaction. FirstLink will also issue certain members of the Newman investor group 2 million shares of FirstLink common stock at $2 per share under a three-year note.
A. Roger Pease, FirstLink's Founder, President and CEO, said, ''The additions of U.S. OnLine and GMAC Resident's Advantage will substantially expand the number of residential units available for FirstLink's bundled telecommunications services, and we are eager to begin capitalizing on these relationships. We believe that we now have an ideal vehicle for developing an e-commerce presence in the MDU marketplace. The agreement will also provide us with the capital to aggressively acquire private cable operators as part of our previously announced roll-up strategy.
''Additionally, we are pleased to have a company with GMACCM's reputation make an investment in FirstLink through its participation in the Newman investment group. It is a vote of confidence in our business plan. With industry contacts across the United States, GMACCM's involvement will open doors to significant new opportunities for FirstLink.''
David E. Creamer, GMACCM's President, said, ''The transfer of Resident's Advantage to an independent company will allow us to unlock value while at the same time permit us to offer services to our borrower clients through the proposed marketing agreement.''
As previously announced, FirstLink will issue certain shareholders and creditors of USOL 1.5 million shares of common stock and 1.5 million warrants to purchase common stock at $5.50 a share. USOL, based in Austin, Texas, currently provides service in five major markets -- Austin, Dallas, San Antonio, Denver and Washington, D.C. -- with a total of 15,000 residential units passed.
Rob Solomon, Founder and CEO of USOL, said, ''We are pleased to move a step further in our relationship with FirstLink, and to have stepped up to a new level of opportunity with the addition of GMAC Resident's Advantage.''
Headquartered in Portland, Oregon, FirstLink provides integrated telecommunications and entertainment services to residents of multi-family apartment and condominium complexes. Services consist of local and long distance telephone, cable television and high speed Internet access, in a single package at below market prices, all with the convenience of a single monthly invoice for the resident.
Statements contained in the news release that are not historical facts are forward looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties, which would cause actual results to differ materially from estimated results. Some of these risks include the ability of FirstLink to negotiate definitive agreements for the acquisitions, the ability to obtain financing required, and such risks and uncertainties are detailed in the Company's filings with the Securities and Exchange Commission.
SOURCE: FirstLink Communications, Inc.
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