Quebec, Canada – (The Hosting News) – August 28, 2008 – Web hosting services company, iWeb Group Inc., has entered into a partnership for a $22M financing agreement, with Goldman Sachs Credit Partners L.P., covering long term growth of the company’s data centers, dedicated server leasing and web hosting operations.
Eric Chouinard, Chief Executive Officer of iWeb remarked, ”With this agreement, Goldman Sachs will provide financing to allow us to further our business objectives.”
iWeb will initially receive $ 10M USD in senior debt, 5 years, 16% and $ 1M in common shares will be issued to Goldman Sachs at $ 1.30 per share, these common shares will be subject to a four-month hold period. A subsequent $ 1M in shares will follow at $ 1.30, subject to certain market conditions. Under the second part of the agreement, Goldman Sachs can provide an additional $ 8M in senior debt with $ 2M in shares to be issued at market price, all subject to certain conditions and performance indicators.
Marc Guindon, Vice-President and Chief Financial Officer added, ”A deal of this magnitude will allow us to continue investing in the infrastructures which are vital to maintaining our growth, which has been outstanding thus far.”
Last year, iWeb’s financial results indicated a revenue of $3.2 million, with a 62% increase in revenues compared to the first quarter of previous fiscal year.
Other highlights included:
– Adjusted EBITDA(1) of $0.8 million, a 65% increase over the first quarter of fiscal 2007 – Closing of a 3.3 million of shares public offering with gross proceeds of $4.1 million – Beginning of installation work of the Nuns’ Island premises for a new co-location data center.
For the first quarter of 2008, consolidated revenues increased $1.2 million or 62% to $3.2 million compared to the same quarter of last year. This revenue growth can be attributed primarily to a steady rise in dedicated server demand. Gross profit margin for the first quarter of fiscal 2008 was in line with last year margin at 54%. The benefits of tight operating cost control were offset by the decrease in value of the U.S. dollar against the Canadian dollar, having a negative effect on Company’s revenues in the last quarter. More than 70% of iWeb revenues are generated in U.S. currency. Total operating expenses for the quarter ended December 31, 2007, were 53% of revenue, compared to 47% for the same three-month period of fiscal 2007.
As discussed, net earnings for the last quarter were impacted by a stronger Canadian dollar against the U.S. dollar, by higher overhead costs in order to support the Company’s growing operations, and by a higher non-deductible share-based compensation expenses which have also a negative impact on the Company’s effective tax rate, increasing it to 42%, from 32% in the first quarter of fiscal 2007.
Founded in 1996, iWeb offers a full line of advanced IP hosting services either through shared hosting, dedicated servers or co-location in three data centers, featuring over 52,000 square feet of floor space and the latest technological equipment. iWeb provides services in English, French and Spanish to clients in more than 130 countries.
For more information about iWeb, please visit: www.iweb8.com.