Equinix to Merge i-STT and Pihana Pacific into its Internet Exchange Services Business; Equinix to Retire Approximately 80% of its Outstanding Bonds and Receive New Cash Investments of $30 Million
MOUNTAIN VIEW, Calif., Oct 2, 2002 (BUSINESS WIRE) -- Equinix, Inc.
(Nasdaq:EQIX) today announced that it has entered into definitive agreements for
a strategic merger whereby Equinix will integrate the assets of i-STT, a
wholly-owned Internet infrastructure services subsidiary of Singapore
Technologies Telemedia Pte Ltd (ST Telemedia), and Pihana Pacific, a leading
provider of neutral Internet exchange data center services and managed
e-infrastructure services in Asia-Pacific, into its core Internet exchange
services business to form the largest global network neutral Internet exchange
services company. The merged company will continue to operate under the Equinix
name and management.
As part of the transaction, ST Telemedia, through its subsidiary STT
Communications Ltd, will make a strategic investment in Equinix in the amount of
$30 million. With this investment, Equinix also announced plans to substantially
de-leverage the business by retiring more than $130 million in debt, including
approximately 80% of its outstanding Senior Notes, through a combination of cash
and equity, and a further reduction of its credit facility.
Equinix will integrate i-STT's Internet exchange service business and
substantially all of Pihana's Internet exchange center operations in
Asia-Pacific and the U.S. into the Equinix business. With the addition of the
i-STT and Pihana businesses, Equinix will have a total footprint of more than
one million square feet of Internet exchange center space across 14 Internet
Business Exchange(TM) (IBX(R)) centers in six countries. The company will also
have more than 400 customers, including AT&T, EDS, Electronic Arts, Goldman
Sachs, IBM, Kyocera, MSN, Royal & SunAlliance, Electronic Arts, Sony, and Yahoo!
Significantly, the company will feature more than 100 network service providers,
adding to the unique mix of service providers already available at Equinix. The
companies are targeting completion of the transaction by year-end. The closing
and its timing are subject to the approval of Equinix's stockholders, SEC
clearance and satisfaction or waiver of other closing conditions.
The transaction will enable Equinix to provide customers with a single-source
solution for their Internet infrastructure and IT services requirements for
consistent quality and streamlined, integrated services throughout the U.S. and
Asia-Pacific. It will also allow Equinix to immediately expand into
Asia-Pacific, the fastest growing global market for IT infrastructure services
according to Gartner Research, without incurring the significant capital
expenditures of building IBXs internationally, and will provide Asia-Pacific
customers with immediate access to leading IT infrastructure and Internet
exchange services in the United States. Additionally, Equinix will gain access
to i-STT's and Pihana's customer base of marquee Asian and multi-national
business customers.
"This merger presents clear synergies between the businesses and creates the
largest global network neutral Internet exchange company," said Peter Van Camp,
CEO of Equinix. "Adding the assets of i-STT and Pihana to Equinix extends beyond
the significant operational benefits of combining the businesses. Most
importantly, Equinix now offers customers access to quality services in two of
the most important markets in the world, providing comprehensive and seamless
network exchange and IT infrastructure services internationally."
Equinix will continue to operate under the existing Equinix senior management
team with Peter Van Camp as CEO. A new head of Asia-Pacific will be named at a
later time. Equinix, i-STT and Pihana will assemble a transition team comprised
of senior managers to ensure a seamless integration of the companies. Equinix
will remain headquartered in Mountain View, California. Asia-Pacific regional
headquarters will be located in Singapore.
Financial Terms of the Transaction
As a part of the transaction, ST Telemedia will become the largest strategic
shareholder in Equinix with a contribution of the i-STT business and a cash
investment of $30 million through the acquisition of Equinix's convertible debt.
Approximately $23 million of the proceeds from this transaction will go towards
retiring more than $130 million of Equinix's debt, including approximately 80%
of the company's outstanding Senior Notes and a further reduction of the credit
facility. The remainder will be used to fund on-going operations. As a part of
this transaction, the company also expects to reset the loan covenants in its
credit facility consistent with the anticipated future performance of the new
company.
The capitalization of the company post-closing and pre-conversion of the ST
Telemedia convertible debt and warrants, will be as follows: existing Equinix
shareholders will hold approximately 33% of the company; ST Telemedia will hold
approximately 28%; former Pihana Pacific stockholders will hold approximately
21%; and the former Senior Noteholders will hold approximately 18% of the
outstanding Equinix stock.
"Today's announcement underscores our ability to deliver business growth while
significantly de-leveraging the business," said Van Camp. "These agreements and
the addition of ST Telemedia as a strong strategic investor, results in a
financially strengthened business with a healthy balance sheet for future
business growth and a larger revenue base with the potential for strong EBITDA
growth. With the completion of this transaction, Equinix is well positioned to
continue to execute on the strengths of each of the businesses, build a
profitable company and grow investor value over the long term."
Equinix will hold an investor conference call today at 9:00 a.m. Eastern Time
(6:00 a.m. Pacific Time) to discuss the details of this announcement. To hear
the conference call, please dial 212/547-0138 (domestic and international) at
8:50 a.m. (ET) and reference the passcode (EQIX). A simultaneous live Webcast of
the call will be available over the Internet at www.equinix.com, under the
Investor Relations heading.
About Equinix
Equinix is the leading provider of core Internet exchange services that allow
networks, Internet infrastructure companies, enterprises and content providers
to grow, manage and control their network and Internet operations for
unparalleled performance. Through the company's seven Internet Business
Exchange(TM) (IBX(R)) centers, customers can directly interconnect with the
providers that serve more than 90% of the world's Internet networks and users
for their critical peering, transit and traffic exchange requirements. These
interconnection points facilitate the highest performance and growth of the
Internet by serving as neutral and open marketplaces for Internet infrastructure
services, allowing customers to expand their businesses while reducing costs.
Customers include Associated Press, AT&T, Cable& Wireless, Charles Schwab,
Earthlink, EDS, Electronic Arts, EYT, Genuity, Google, IBM, Level3, MSN, Qwest,
UUNET/WorldCom, Washingtonpost.Newsweek Interactive, and Yahoo!. For more
information, visit the company's Web site at www.equinix.com.
Equinix and IBX are registered trademarks of Equinix, Inc. Internet Business
Exchange is a trademark of Equinix, Inc.
About i-STT
i-STT is a leading provider of managed IT infrastructure services that help
businesses effectively manage their IT investments for optimal performance,
continuous availability and immediate scalability. Leveraging on its world-class
IP-based WEBCentre data centre facilities located in strategic business cities
in Asia, i-STT offers an infrastructure outsourcing solution that combines the
essentials of telecommunications, Internet connectivity and network access
offered through its telecommunication community hub with application
infrastructure services such as operations support, monitoring, managed
security, managed platforms and outsourced enterprise messaging to support her
customers' mission-critical servers, Internet and business applications and
data.
i-STT's managed IT infrastructure service capabilities and technical
competencies are integrated with other value-added services under two business
focuses: WEBCentre services and Global Network Services. The company markets and
sells its services globally, and currently has in-country operations in
Singapore, Bangkok, and Shanghai. For more information about i-STT and its
services, visit www.i-STT.com.
About Pihana Pacific
Pihana Pacific is the leading provider of managed e-infrastructure services,
known for being the first company to build, brand and manage "neutral" Internet
exchange data centers in Asia/Pacific. Pihana Pacific offers an integrated suite
of managed services including: enterprise system management, storage, colocation
and disaster recovery services that enable enterprises and service providers to
expand their market boundaries and gain efficiencies in the performance and cost
of their IT operations. At the core of its services are Pihana's world-class
facilities, strategically located in Tokyo, Seoul, Hong Kong, Singapore, Sydney,
Honolulu and Los Angeles. This broad base provides customers with unprecedented
geographic reach throughout the Asia/ Pacific region.
Headquartered in Honolulu, Pihana's Asia/Pacific presence includes a Regional
Headquarters in Hong Kong and sales offices in Singapore, Tokyo, Seoul, Sydney,
San Francisco, Los Angeles, Denver and Washington D.C. Pihana is a Hawaiian word
meaning "fullness" and "completion" associated with a gathering. For more
information, please visit www.pihana.com.
About Singapore Technologies Telemedia
Incorporated in 1994, Singapore Technologies Telemedia (ST Telemedia) is a
leading information-communications group in Singapore. The company has three
major business focuses: Data & Voice, Broadband & Multimedia and e-Services.
Through its diverse group of leading innovative companies, ST Telemedia provides
such services as fixed and mobile telecom services, wireless data communications
services, Internet mobile services, managed IP network services, managed hosting
services, satellite services, and enhanced broadband and multimedia services.
ST Telemedia aims to become a significant global data and IP-centric
communications group. It is a wholly-owned subsidiary of the Singapore
Technologies (ST) group, a quality technology-based multinational conglomerate
with core businesses in engineering, technology, infrastructure & logistics,
property and financial services. ST's turnover (revenue) for 2001 was S$9
billion and the group employs 54,000 people worldwide. For more information,
visit www.stt.st.com.sg.
Forward Looking Statements
This press release includes certain "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995 concerning
Equinix's business, operations and financial condition. Such forward-looking
statements are subject to various known and unknown risks and uncertainties and
Equinix cautions you that any forward-looking information provided by or on
behalf of Equinix is not a guarantee of future performance. Actual results could
differ materially from those anticipated in such forward-looking statements due
to a number of factors, including, but not limited to, failure of the proposed
combination to close, costs related to the proposed combination, the risk that
the businesses of Equinix, Pihana Pacific and i-STT will not be integrated
successfully or that Equinix will incur unanticipated costs of integration, the
challenges of operating IBX centers and developing, deploying and delivering
Equinix services; competition from existing and new competitors; the ability to
generate sufficient cash flow or otherwise obtain funds to repay outstanding
indebtedness and the loss or decline in business from our key customers.
Investors and security holders are also directed to consider the other risks and
uncertainties discussed in Equinix's Securities and Exchange Commission (the
"SEC") filings. All such forward-looking statements are current only as of the
date on which such statements were made. Equinix does not undertake any
obligation to publicly update any forward-looking statements to reflect events
or circumstances after the date on which any such statement is made or to
reflect the occurrence of unanticipated events.
Where You Can Find Additional Information
Investors and security holders of Equinix are urged to read the various filings
that have been filed and will be filed with the SEC, including the proxy
statement and the registration statement that are required to be filed with
respect to the transaction described above, as the filings will contain
important information. Investors and security holders may obtain a free copy of
the proxy statement and the registration statement (when it is available) and
other documents filed by Equinix with the SEC at the SEC's Web site at
http://www.sec.gov. The proxy statement and the registration statement and these
other documents may also be obtained for free from Equinix.
In addition to the proxy statement and the registration statement, Equinix files
annual, quarterly and other reports, proxy statements and other information with
the SEC. You may read and copy any reports statements or other information filed
by Equinix at the SEC public reference rooms at 450 Fifth Street, N.W.,
Washington, D.C. 20549 or at any of the SEC's other public reference rooms in
New York, New York and Chicago, Illinois. Please call the SEC at 800/SEC-0330
for further information on the public reference rooms. Equinix's filings with
the SEC are also available to the public from commercial document-retrieval
services and at the Web Site maintained by the SEC at http://www.sec.gov.
Participants in Solicitation
Equinix, Pihana Pacific, i-STT Pte Ltd and STT Communications Ltd, including
their respective directors, executive officers and certain other members of
management or employees may be deemed to be participants in the solicitation of
proxies from Equinix's stockholders and the solicitation of tenders from the
holders of Equinix's 13% Senior Notes in connection with the proposed
transaction. A description of any interests that Equinix's, Pihana Pacific's,
i-STT Pte Ltd's and STT Communications Ltd's directors and executive officers
have in the proposed transaction will be contained in the proxy statement and
the registration statement. These two documents will be available free of charge
at the SEC's Web site at http://www.sec.gov and from Equinix.
CONTACT:
Equinix, Inc.
Melanie Mock, 650/316-6099 (Investor Relations)
mmock@equinix.com
Maureen O'Brien, 650/316-6043 (Media)
mobrien@equinix.com
David Fonkalsrud, 415/255-6506 (Media)
dave@kfcomm.com
