From www.nasdaq.com NEWS
STAR Telecommunications Signs Definitive Agreement to
Acquire PT-1 Communications, Inc.
SANTA BARBARA, Calif.--(BUSINESS WIRE)--June 9, 1998--
Acquisition of the nation's largest prepaid card provider will create $1 billion
international telecommunications company; STAR establishes leadership position
in retail long distance services marketplace
STAR Telecommunications, Inc. (NASDAQ:STRX) today announced that it has
signed a definitive agreement to acquire privately held PT-1 Communications,
Inc. (PT-1), the largest prepaid debit card company in the United States.
PT-1 provides international prepaid calling card, direct dial, 10XXX and 1+
services through its digital switching network. The acquisition will be completed
through the issuance of 21 million shares of STAR common stock to the PT-1
stockholders through the merger of a STAR subsidiary into PT-1. The
acquisition will be accounted for as a pooling of interests and will be immediately
accretive in 1998.
"The synergies between PT-1 and STAR will enable us to diversify our traffic
mix, as well as introduce PT-1 cards into our current and planned international
markets," said Christopher Edgecomb, Chairman of the Board and Chief
Executive Officer of STAR. "Our long-term strategy has been to diversify our
traffic mix from our current 90% wholesale and 10% retail to 50%/50% by the
year 2001. This acquisition accelerates our push into the retail market by two full
years, and establishes STAR as a leader in the field."
Samer Tawfik, Chairman of the Board and Chief Executive Officer of PT-1
Communications, commented, "We are very excited about today's
announcement. The combination of our networks will provide a solid foundation
for the continuing expansion of our calling card services throughout the U.S. and
overseas. As a wholesale customer of STAR's for the past three years, PT-1
has been impressed by the high quality standards of their technology and their
service. We have also built our network on high quality Nortel DMS switches
which will allow us to easily migrate our traffic onto the STAR network."
Mary Casey, President of STAR, added, "STAR is one of the largest
terminators on a wholesale basis of international traffic. PT-1, by maintaining
quality wholesale services with a cost-effective network, has built one of the
largest originators of international traffic in this country. By bringing PT-1 on
board with STAR, we literally have control of the call from the time the
consumer picks up the phone or purchases a pre-paid debit card all the way to
where the phone rings at the end country. By cutting out the normal distribution
channels of traffic, we have the opportunity to increase our margins on PT-1
calls while actually improving the quality of the call."
Under the terms of the definitive merger, PT-1's stockholders will receive
21,000,000 shares of STAR common stock and the acquisition will be accounted
for as a pooling of interests. PT-1 Communications reported revenues
(unaudited) of approximately $431 million and net income of approximately $11.5
million (unaudited) for its fiscal year ended March 31, 1998.
As in STAR's previously announced acquisitions, PT-1 will be accretive to
earnings. The transaction is subject to the approval of the stockholders of STAR,
to various regulatory approvals and to standard closing conditions and is
expected to close in the fourth quarter of this year.
PT-1 Communications is a leading emerging provider of international long
distance services to retail customers and telecommunications carriers. The
Company markets long distance services, 10XXX, and prepaid telephone calling
cards, including local-area calling (LAC) cards that provide local access to the
company's network, country calling cards that provide discounted rates to
specific countries, and a World Card for international calls, through an extensive
network of distributors and more than 50,000 independent retail outlets
throughout the United States.
STAR Telecommunications is a multinational long-distance provider offering
switched-voice services to long-distance carriers and commercial customers
throughout the world. STAR provides international long distance service through
a global network of digital switching facilities and undersea fiber optic cable
systems. STAR Telecom holds domestic switching facilities in New York, Los
Angeles, Dallas and Miami, and international switching facilities in London,
Frankfurt, Hamburg, Dusseldorf and Munich. Visit STAR Telecom at
www.startel.com.
Except for the historical information contained herein, this press release contains
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of
1934, as amended, and are subject to the safe harbors created thereby. The
Company's future actual results could differ materially from the forward-looking
statements discussed herein. A list of the factors that could cause actual results
to differ materially can be found in the documents the Company files with the
SEC, including those contained in STAR's prospectus, and the Form 10-Q for
the quarter ended March 31, 1998.
CONTACT: Morgen-Walke Associates
Chris Danne or Todd Friedman, 415/296-7383
or
STAR Telecommunications
Chief Financial Officer
Kelly Enos, 805/899-1962 |
