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Mail.com to Acquire Swift Telecommunications, Including AT&T EasyLink
Acquisition to Create Enterprise Messaging Services Leader
NEW YORK--(BUSINESS WIRE)--Feb. 7, 2001-- Accretive Transaction Expected to Accelerate Cashflow
Breakeven to 3Q 01
Mail.com, Inc. (NASDAQ: MAIL - news), a leading global provider of outsourced messaging services to enterprises and service providers, announced today that it has signed a definitive agreement to acquire Swift Telecommunications, Inc. (STI), a leading provider of international business messaging services. Concurrent with the definitive agreement, STI has acquired from AT&T (NYSE: T - news) its EasyLink Services business, a worldwide leader in enterprise-class advanced messaging services. The combined EasyLink, STI and Mail.com businesses will have over 40,000 enterprise customers, provide the most comprehensive messaging solution set in the marketplace and have an established international presence in over 40 countries. Mail.com expects the transaction to be accretive to operating earnings and to accelerate its breakeven on an operating cash flow basis to the third quarter of 2001. Following the completion of the STI acquisition, the combined businesses will continue offering services under the EasyLink brand.
``STI, including the EasyLink Services business, contributes highly complementary strengths and assets to Mail.com,'' said Thomas Murawski, CEO of Mail.com. ``In one transaction, we will achieve dramatic growth in our revenues and accelerate our breakeven, quadruple our customer base to over 40,000 enterprises allowing for significant cross-selling opportunities and solidify our international presence, with minimal overlap in our customer base, technology and services. The acquisition is another step forward in implementing our plans to focus exclusively on outsourced messaging services.''
Solutions, Scope and Scale
The completion of this acquisition will position Mail.com as the premier provider of outsourced messaging services, with 2001 revenues projected to exceed $150 million. The combined businesses will have an unmatched position in the outsourced messaging services market, and will be building on a brand name that is globally recognized in the enterprise market for quality and industry leadership. In addition, Mail.com will have a services portfolio that spans the enterprise messaging category from mailbox hosting to high volume e-commerce message distribution applications, and global network facilities in over 40 countries.
Operating on a scale that includes over 20 million hosted e-mailboxes and over 2.5 million messages distributed daily, Mail.com will provide the essential infrastructure companies need to do business in Internet time. In addition to hosting e-mailboxes for enterprises and service providers, Mail.com will provide the services that connect banks for wire transfers, distribute airline e-tickets to passengers, tie together electronic trading communities and keep viruses and spam out of corporate e-mail networks.
Relationships
The combined businesses will have relationships with over 40,000 enterprise customers globally -- the largest corporate customer base of any provider of outsourced messaging services today. These customers include the majority of the Fortune 500, over 100 major global telecommunications carriers and over 150 solutions and distribution partners in 50 countries. Additionally, Mail.com will have relationships with over 90 governmental PTTs (postal telegraph and telephone) worldwide.
Outsourced Messaging Solutions
Mail.com will provide a solutions portfolio that meets the complete range of current and emerging enterprise messaging needs and will include:
Hosted Mailbox Services - e-mail and collaboration services based on POP3/IMAP4 Internet e-mail, Microsoft Exchange and Novell GroupWise platforms,
E-mail Firewall Services - virus, spam and content screening for messaging environments,
Message Distribution Services - secure and accountable message delivery services including telex, EDI, broadcast and production e-mail and fax messaging with connectivity to virtually any enterprise environment where business transactions originate, and
Professional Services - consulting, integration, migration and support services that project our messaging application and technology expertise into our customer's organization.
``The outsourced messaging services market is going to be driven by solid customer relationships based on trust, reliability and quality of service. By combining these businesses, we will be able to deliver the most comprehensive solution set in the marketplace today to meet these demands,'' continued Murawski. ``As the market for outsourced messaging continues to grow, we have an unparalleled opportunity to extend the thousands of solid business relationships that EasyLink, STI and Mail.com have established, as the messaging needs in our base of 40,000 enterprise customers expands.''
Transaction Details
At the closing of the acquisition by STI of the EasyLink Services business from AT&T, Mail.com advanced $14 million to STI in the form of a loan, the proceeds of which were used to fund part of the cash portion of the purchase price to AT&T. Upon the closing of the acquisition of STI, Mail.com will assume a $35 million note issued to AT&T, which is secured by the STI and EasyLink assets. The note is payable in monthly installments over four years and bears interest at the rate of 10% per annum.
Upon the closing of the acquisition of STI, Mail.com will pay to the sole shareholder of STI approximately $835,000 in cash and issue an unsecured note for approximately $9.2 million and approximately 19 million shares of Mail.com Class A common stock as the purchase price for the acquisition of STI. Mail.com will also pay additional consideration to the sole shareholder of STI equal to the amount of the net proceeds, after satisfaction of certain liabilities of STI and its subsidiaries, from the sale or liquidation of the assets of one of STI's subsidiaries. Mail.com will also reimburse the sole shareholder of STI for a $1.5 million advance made to STI, the proceeds of which were used to fund the balance of the cash portion of the purchase price and certain other obligations to AT&T. The STI transaction, including the consideration paid to AT&T, is valued at approximately $83.6 million based on the closing price of Mail.com's Class A common stock on the close of business on February 5, 2001. The acquisition of STI is subject to compliance with regulatory approvals and is expected to close within two weeks.
As part of the transaction with STI, Mail.com has also agreed to acquire Telecom International, Inc., which does business as ``AlphaTel'' and is an affiliate of STI, and the 25% minority interests in two STI subsidiaries, for approximately $165,000 in cash, promissory notes in the principal amount of $1.8 million and 3.7 million shares of Mail.com Class A common stock, a total value of approximately $6.5 million, based on the closing price of Mail.com Class A common stock on February 5, 2001. These additional transactions are subject to execution of definitive documentation, receipt of regulatory approvals and other customary conditions.
Additionally, upon the closing of the STI acquisition, George Abi Zeid, President and sole shareholder of STI, will join Mail.com as President of International Operations and will become a member of the Mail.com Board of Directors.
Mr. Abi Zeid said, ``I am eager to join forces with Mail.com at the forefront of the rapidly growing outsourced messaging revolution and look forward to accelerating its growth internationally. The unbeatable combination of EasyLink, STI and Mail.com's complementary expertise, customers, technology and service offerings will solidify our position as the leading provider of outsourced messaging solutions to the enterprise market worldwide.''
Business Outlook
With the closing of the STI acquisition, Mail.com expects that revenue for 2001 will exceed $150 million. Additionally, the Company expects the transaction will be accretive to operating earnings and to accelerate breakeven on an operating cash flow basis to the third quarter of 2001. The Company will provide additional guidance when it reports fourth quarter and full year 2000 results on February 15th. For the fourth quarter of 2000, the Company expects revenues to be in the range of $17 million to $18 million, and the pro-forma net loss per share, excluding non-operating and certain non-cash items, to be in the range of $0.50 to $0.53.
Conference Call
Mail.com will host a conference call at 10:00 a.m. EST today, Wednesday, February 7th to discuss the transaction. Listeners should call five minutes prior to the start of the call at 212/271-4643 or 415/537-1954. If you are unable to participate in the call, a replay will be available until Monday, February 12th at 12:00 p.m. EST. The replay number is 800/633-8284 and the ID number is 17874886.
About Mail.Com
Mail.com, Inc. (NASDAQ: MAIL - news) is a leading global provider of outsourced messaging services to enterprises and service providers. The Company's solution set includes hosted Microsoft Exchange, Novell GroupWise and Web/POP3-based e-mail and collaboration services; hosted e-mail firewall services such as virus scanning, spam blocking and content filtering; and a full range of Web-based, desktop and production Internet Fax solutions. Mail.com has IP network facilities in 20 key countries and currently serves over 10,000 corporate customers worldwide.
This news release may contain statements of a forward-looking nature relating to the future events or the future financial results of Mail.com. Investors are cautioned that such statements are only predictions and that actual events or results may differ materially. In evaluating such statements, investors should specifically consider the various factors that could cause actual events or results to differ materially from those indicated from such forward-looking statements. These include: historic and continuing losses; the need to raise additional capital; significant leverage; potential obstacles in the development of the market for internet messaging and collaboration services outsourcing, such as concerns about security and reliability; the ability to attract additional customers or to expand services sold to existing customers; significant competition; computer system failure and interruption of service; the risks of international operations, including regulatory uncertainties; the risks inherent in an acquisition strategy; the risk that the acquisition of STI and EasyLink will not be completed or, if completed, the risks inherent in integrating the STI and EasyLink businesses; the risks of retaining the customers of the STI and EasyLink businesses and selling additional services to such customers. These and other risks and uncertainties are described in more detail in the Company's most recent prospectus filed with the Securities and Exchange Commission and in subsequent filings with the Securities and Exchange Commission.
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Contact:
Mail.com
Investor contact:
Kathleen Holmes Robb, 212/425-4200 x376
kholmesrobb@staff.mail.com
or
Media contact:
Holly Lehr, 212/425-4200 x422
hlehr@staff.mail.com |
