Corvis Corporation to Acquire Focal Communications; Expands Market Opportunities and Revenue Stream for Broadwing Communications While Accelerating Broadwing's Access Forward Cost Initiative.Business Editors/High-Tech Writers
COLUMBIA, Md.--(BUSINESS WIRE)--March 8, 2004
Nationwide CLEC (Competitive Local Exchange Carrier) An organization offering local telephone service that is not one of the traditional telephone companies. The Telecommunications Act of 1996 allowed competition to the incumbent telcos (ILECs), enabling new companies (CLECs) Offers Complementary Footprint in Major Metro Areas;
Broadwing's All-Optical Network A communications network that works completely in the optical domain. It uses optical switches connected by optical fibers. See optical switch and optical computer. to Lower Focal's
Long Haul Long distance. Long haul implies traversing a state or a country. Contrast with short haul. Transport Costs
Corvis Corporation (Nasdaq:CORV), a leading provider of intelligent optical networking Communications between computers, telephones and other electronic devices using light. An optical network is far more reliable and has far greater potential transmission capacity than networking in the electrical domain. See optical fiber. solutions, today announced that it has signed an agreement to acquire Chicago-based competitive local exchange carrier (CLEC) Focal Communications Corporation, a nationwide provider of voice and data solutions for enterprises, carriers and resellers.
"We believe that Focal meets all the criteria we've previously discussed for a strategic acquisition. Clearly, Focal will help further support our growth strategy for Broadwing," said Dr. David Huber, Corvis chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "Focal will help us expand our nationwide network footprint and reduce our access costs. They will also help add valuable customers and revenue without putting undue stress on our balance sheet."
Broadwing Communications built and operates a one-of-a-kind, ultra-long haul, all-optical network and award-winning IP backbone that provides networking solutions for voice, video and data applications used by carriers and enterprises. Focal is a competitive local exchange carrier with 4,000 enterprise and wholesale/carrier customers. Focal operates in 23 Tier 1 markets from Boston to Miami and New York New York, state, United States
New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of to Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. . Focal also has its own metro fiber footprint in nine Tier 1 national markets.
The Company said it has agreed to acquire Focal for a total consideration of $210 million, which will be comprised of approximately $101 million in equity to be issued to Focal's existing equity holders and the assumption or payment of approximately $109 million of Focal's existing debt and other long-term capital lease obligations.
Focal expects to report annual revenues of approximately $320.0 million for fiscal 2003. As of December 31, 2003, Focal had cash and cash equivalents of $24.9 million.
Focal Communications will expand the reach of Broadwing's 18,500-mile nationwide all-optical network into targeted local markets throughout the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . The addition of these metropolitan markets will help further support the company's market attack plan with enterprise and strategic carrier customers.
"This is a combination that makes great business sense. Our operations clearly complement each other and we both have a reputation for and dedication to excellent customer service," said Kathleen Perone, president and CEO of Focal Communications.
The Company also stated that Focal Communications would help accelerate its progress with its Voice over Internet Protocol See Internet and TCP/IP.
(networking) Internet Protocol - (IP) The network layer for the TCP/IP protocol suite widely used on Ethernet networks, defined in STD 5, RFC 791. IP is a connectionless, best-effort packet switching protocol. (VoIP) services offering and its "Access Forward" cost initiative, which is aimed at reducing local loop or access charges. The Focal acquisition will help reduce planned capital expenditures for Broadwing's current voice network platform due to the synergies expected with Focal's state-of-the-art voice network. In turn, Broadwing will enable Focal to offer bundled data and voice services to its existing customers who subscribe primarily to voice services today. The Broadwing network is expected to significantly lower Focal's current long-haul transport and switching costs.
The acquisition has been approved by the Boards of Directors of both Corvis and Focal and is subject to customary closing conditions including the approval of Focal's shareholders, which is required to be obtained within 30 days. Corvis said it expects the acquisition to close late this summer.
Corvis' legal advisors were Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, PC. Focal's legal advisors were Kirkland and Ellis, LLP LLP - Lower Layer Protocol . Focal was also advised in the transaction by Miller Buckfire Lewis Ying & Co., LLC (Logical Link Control) See "LANs" under data link protocol.
LLC - Logical Link Control .
Corvis Corporation, and its consolidated subsidiary, Broadwing Communications, deliver innovative optical networking solutions that deliver voice, video and data solutions rapidly, flexibly and at the lowest total cost in the industry. Broadwing Communications is an innovative provider of data, voice and video solutions to carriers and large enterprises. Enabled by its one-of-a-kind, all-optical network and award-winning IP backbone, Broadwing offers a full suite of the highest quality communications products and services, with unparalleled customer focus and speed.
Corvis provides service providers and government agencies with scalable optical networking equipment that dramatically reduce the overall expenses associated with building and operating networks.
Corvis, Broadwing and the Corvis and Broadwing logos are trademarks and/or service marks of Corvis Corporation. All other trademarks are the property of their respective owners.
Investor Note Regarding Forward-Looking Statements forward-looking statement
A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections.
This announcement and related information may contain certain forward-looking statements that are subject to risks and uncertainties. Actual results could differ materially from those currently anticipated as a result of a number of factors, including, but not limited to, the risks and uncertainties discussed under "Risk Factors" and "Management's Discussion and Analysis Management's discussion and analysis (MD&A)
A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial of Financial Condition and Results of Operations" in the company's filings with the Securities and Exchange Commission.