I dunno. Is this good news?
PSINet Receives $30 Million in Private Financing
09:58am EST 11-Nov-97 Corporate Release (Michael Binko, 703-904-4285) PSIX
PSINet Receives $30 Million in Private Financing
Positions Company for Continued Strong Growth
in Business Internet Services and International Market Leadership
HERNDON, Va., Nov. 11 / -- PSINet, Inc. (Nasdaq: PSIX), the first
commercial Internet service provider (ISP), today announced that it has received
a $30 million investment by Brown Simpson Asset Management, LLC, as lead
investor, and SBC Warburg Dillon Read Inc., Lehman Brothers Inc., and KA
Investments, LDC. Under the terms of the financing, PSINet received $30 million
in exchange for the issuance of new Series B 8% convertible preferred stock.
"PSINet has uniquely positioned itself as the premier independent ISP focusing
on international business-grade Internet access," said William L. Schrader,
chairman, president, and CEO of PSINet. "We believe this investment signifies
recognition of our sound business strategy by sophisticated investors."
"This financing bolsters PSINet's ability to enhance its worldwide presence,"
stated Edward D. Postal, PSINet's senior vice president and chief financial
officer. "In addition, the infusion of capital will allow us to support the
growth of our existing operations, including the equipment, bandwidth and Web
collocation assets necessary to capitalize on the high rate of Internet growth."
Industry experts anticipate substantial growth in Web services among small and
medium size businesses driven by unique applications such as multimedia and
electronic commerce. According to the Internet Commerce Market Model research
by IDC, global Internet and World Wide Web growth will be accompanied by a
substantial increase in the number of users that will buy and sell goods and
services over the Web.
"We are very excited to make a substantial investment supporting the business
plan of the top Internet service provider," said James R. Simpson, Principal,
Brown Simpson Asset Management, LLC. "PSINet is a well managed company in a
fast growing industry and our investment is well positioned to both enhance the
company's expansion plans and reward the preferred stock holders."
Under the terms of this three-year agreement, the convertible preferred shares
will accrue dividends at a rate of 8% per annum, payable quarterly, in cash or
PSINet Series B convertible preferred stock, at PSINet's option. These
securities are convertible into PSINet common stock at $10 per share (a 25%
premium over the market price at the time of issuance) during the first year.
The conversion price may be adjusted downward at the end of each subsequent year
if PSINet's stock price is then below the existing conversion price. The
holders also received demand registration rights as part of the transaction.
PSINet has the right to call the preferred stock for redemption at the end of
three years and under certain other circumstances.
A small portion of the $30 million proceeds is intended to support the
integration of the recently acquired CalvaCom SA in France, as well as iSTAR
internet inc, a Canadian ISP which PSINet yesterday announced plans to acquire.
"The financial impact and strategic perspective of these actions will be
described by the company in future communications later this quarter," said
Postal.
About PSINet
PSINet is a leading provider of turn-key corporate Internet and intranet
access, managed security services, electronic commerce solutions, and Web
hosting services throughout the United States and abroad. PSINet manages one of
the world's largest and most advanced fast-packet networks, which provides
state-of-the-art, high speed Internet access ranging from dedicated high-speed
circuits to ISDN to high-speed modem dial-up. PSINet backs up its state-of-
the-art network with the industry's original service guarantee, employing
automatic back-up systems and crediting for service outages. Headquartered in
Herndon, Va., PSINet has offices throughout the U.S. and subsidiaries in Canada,
Japan and Europe, including France, Germany, the Benelux Region (Belgium,
Netherlands, and Luxembourg), and the United Kingdom. For more information
contact PSINet by phone at 703-904-4100, by e-mail at info@psi.com or by
accessing the corporate Web site at psi.net.
Certain of the statements made in this release are forward-looking statements
that are subject to material risks and uncertainties. Actual results could
differ materially, as a result of a variety of factors, including competitive
developments, risks associated with the Company's growth, the development of the
Internet market, regulatory risks and other risks which are discussed in the
Company's filings with the Securities and Exchange Commission.
/CONTACT: Michael P. Binko, APR, PSINet Public Relations, 703-904-4100*1597
or Kelli Harrington Nemer, PSINet Investor Relations, 703-904-4100*1245/
END OF NOTE
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