Company Announces Financing Increased to $200 million and Funding of $52
Million Sale-Leaseback Oak Hill Special Opportunities Fund Provides Additional
ST. LOUIS, MO ÃƒÂ¢Ã¢â€šÂ¬Ã¢â‚¬Å“ February 17, 2004 ÃƒÂ¢Ã¢â€šÂ¬Ã¢â‚¬Å“ SAVVIS Communications Corporation
(NASDAQ: SVVS), a leading global managed IP and hosting services provider, today
announced that it has closed on subordinated debt financing of $200 million, and
a sale lease-back of properties with DuPont Fabros for an additional $52
million, which it will use to acquire and operate the assets of Cable &
Wireless USA, Inc. and Cable & Wireless Internet Services, Inc. (together
with certain of their subsidiaries, ÃƒÂ¢Ã¢â€šÂ¬Ã…â€œCable & Wireless AmericaÃƒÂ¢Ã¢â€šÂ¬Ã‚Â or ÃƒÂ¢Ã¢â€šÂ¬Ã…â€œCWAÃƒÂ¢Ã¢â€šÂ¬Ã‚Â).
SAVVIS stated that it has placed $150 million of the proceeds from these
financings, representing the purchase price less the previously delivered
deposit, into escrow and undertaken management of CWA assets pending final
regulatory approvals. SAVVIS expects to obtain these approvals and complete the
asset purchase transaction in early March.
ÃƒÂ¢Ã¢â€šÂ¬Ã…â€œThe $252 million in funding we have arranged provides SAVVIS with
approximately $100 million in working capital to successfully integrate the
companies and continue to provide outstanding service to the CWA customer
base,ÃƒÂ¢Ã¢â€šÂ¬Ã‚Â said Rob McCormick, Chairman and Chief Executive Officer of SAVVIS.
ÃƒÂ¢Ã¢â€šÂ¬Ã…â€œSAVVIS is also very excited about adding Oak Hill Special Opportunities Fund
and DuPont Fabros to our financing group, further demonstrating continued
support of SAVVISÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢ virtualized utility platform, which is delivering high
value managed services with industry leading reliability.ÃƒÂ¢Ã¢â€šÂ¬Ã‚Â
As previously announced, SAVVIS submitted the winning bid on January 22, 2004 at
an auction for the assets of CWA, wholly-owned subsidiaries of Cable and
Wireless plc (NYSE: CWP; LSE: CW), after CWA filed for protection under Chapter
11 of the U.S. Bankruptcy Code in December of 2003.
Terms of Financing
The funding consists of a $200 million debt financing from existing shareholders
Welsh, Carson, Anderson & Stowe (ÃƒÂ¢Ã¢â€šÂ¬Ã…â€œWCASÃƒÂ¢Ã¢â€šÂ¬Ã‚Â) and Constellation Ventures
(ÃƒÂ¢Ã¢â€šÂ¬Ã…â€œConstellationÃƒÂ¢Ã¢â€šÂ¬Ã‚Â), a Bear Stearns asset management fund, now joined by a
group led by Oak Hill Special Opportunities Fund (ÃƒÂ¢Ã¢â€šÂ¬Ã…â€œOak HillÃƒÂ¢Ã¢â€šÂ¬Ã‚Â and, with WCAS
and Constellation, the ÃƒÂ¢Ã¢â€šÂ¬Ã…â€œFinancing PartiesÃƒÂ¢Ã¢â€šÂ¬Ã‚Â), and the sale-leaseback of five
CWA properties for $52 million. The Financing Parties provided subordinated debt
(the ÃƒÂ¢Ã¢â€šÂ¬Ã…â€œNotesÃƒÂ¢Ã¢â€šÂ¬Ã‚Â), which mature five years from the date of initial funding and
are subject to redemption by SAVVIS during the first 360 days after the initial
funding in an amount equal to the NotesÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢ accreted value. During this 360 day
period, the Notes will bear interest at 12.5%, payable semi-annually in kind.
After this period, interest will increase to 15%, payable semi-annually in kind.
The Notes are redeemable at 101% after the fourth anniversary of the initial
funding. In conjunction with this financing, SAVVIS has issued warrants to the
Financing Parties to purchase participating preferred shares that will be
automatically converted to approximately 129.4 million shares of SAVVIS common
stock, at $1.63 per-common share, upon receipt of SAVVIS shareholder approval.
The Financing Parties have exercised the warrants.
Pursuant to the sale-leaseback transaction with DuPont Fabros, SAVVIS has sold
its rights to acquire four of the CWA data centers and one office facility for
$52 million, and will leaseback those facilities for 15 years. With the
consummation of the issuance of the Notes and the sale-leaseback transaction,
SAVVIS has secured over $252 million in new cash to finance CWA related
acquisition activities, including funding ongoing capital expenditures and
working capital needs associated with the newly acquired assets.
ÃƒÂ¢Ã¢â€šÂ¬Ã…â€œWe believe SAVVISÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢ business model and value added services will enable it
to continue to excel in the evolving telecommunications industry,ÃƒÂ¢Ã¢â€šÂ¬Ã‚Â said Glenn
R. August, Managing Partner of Oak Hill Special Opportunities Fund. ÃƒÂ¢Ã¢â€šÂ¬Ã…â€œThe
addition of the Cable & Wireless network and hosting assets drives SAVVIS to
an even larger scale and establishes it as a leading provider of managed IP
communications and computing services. We are pleased to enter into this
transaction with SAVVIS.ÃƒÂ¢Ã¢â€šÂ¬Ã‚Â
The Cable & Wireless America assets SAVVIS is acquiring feature a Tier 1 IP
network, 15 data centers, comprehensive consulting services, and a substantial
Fortune 500 customer base. The acquired assets will add over 3,000 customers and
the combined entity is currently projected to have annualized revenues of
approximately $700 million by year-end 2004. The company currently projects that
substantial infrastructure and operating synergies could be generated by this
acquisition through the optimization of the combined network and hosting
operations and the elimination of duplicate staff functions.
SAVVIS Communications (NASDAQ: SVVS) is a leading Managed Services Provider that
delivers private IP VPNs (virtual private networks), hosting, IP voice and
application services to businesses. SAVVIS solutions are designed for industries
with demanding IP requirements, including legal, media, retail, professional
services, healthcare, manufacturing, and financial services. With its recent
acquisition of the commercial business of WAM!NET, the company now delivers
fully managed media services that enable organizations to share, collaborate,
store and manage content with their partners and clients, and accelerate their
workflows in the process.
SAVVIS was ranked #3 in IP VPN market share by IDC in its 2003 report, trailing
only AT&T and MCI. Known as The Network that Powers Wall StreetSM, its
network reliability was declared ÃƒÂ¢Ã¢â€šÂ¬Ã…â€œperfectÃƒÂ¢Ã¢â€šÂ¬Ã‚Â in Network World magazineÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s
groundbreaking study of backbone performance. In 2003, SAVVIS won the American
Business Awards ÃƒÂ¢Ã¢â€šÂ¬Ã…â€œStevieÃƒÂ¢Ã¢â€šÂ¬Ã‚ÂTM in the category of Best Customer Service
Organization. SAVVISÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢ managed hosting services were awarded the Service
Provider Excellence Award by Boardwatch magazine for its virtualized approach to
managed hosting, and the Market Engineering Award from Frost & Sullivan for
product differentiation and innovation.
For more information about SAVVISÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢ Intelligent IP NetworkSM and managed
hosting solutions, visit: http://www.savvis.net. For information about WAM!NET
This document contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Actual results may differ
materially from SAVVISÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢ expectations. Certain factors that could affect actual
results are set forth as risk factors in SAVVISÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢ SEC reports and filings,
including its annual report on Form 10-K for the year ended December 31, 2002,
as filed with the Securities and Exchange Commission on February 28, 2003, and
all subsequent filings. SAVVIS assumes no obligation to update or supplement
Nancy Bridgman Lysinger
Carter B. Cromley
Director, Public Relations