Deal Gives EarthLink Growth Platform for SME customers
ATLANTA and VANCOUVER, Wash., Dec. 13 /PRNewswire-FirstCall/ -- EarthLink,
Inc. (Nasdaq: ELNK), the nation's next generation Internet service provider
(ISP), today announced the execution of a definitive agreement to acquire New
Edge Networks, a privately-held single-source national provider of private
Virtual Private Networks (VPNs) and secure multi-site managed data networks
and dedicated access for businesses and communications carriers.
The acquisition of New Edge Networks will enable EarthLink to easily and
quickly expand its business in the fast growing small and medium business
market. The Vancouver, Wash.-based company will give EarthLink one of the
largest data communications networks in the country and a customer base that
is expected to generate approximately $120 million in revenues in 2005.
Together, EarthLink and New Edge Networks will be able to package their
voice, data, protection, and security tools to meet the rapidly growing demand
for high-speed access and VPN services by both small office and home office
(SOHO) users as well as small and medium enterprise (SME) customers.
"New Edge Networks is a tremendous growth platform for EarthLink to
compete in the rapidly expanding SME networking market," said Bill Heys,
president of EarthLink's value and small to medium enterprises business unit.
"This acquisition builds upon our existing suite of award-winning services for
small businesses and gives New Edge Networks the added resources to strengthen
its market position."
"When we bring together EarthLink's financial resources and reputation for
outstanding customer service with our national network and proven track record
of performance, we will be uniquely positioned for serving our customers and
tapping the growing market for business networks," said Dan Moffat, president
and CEO of New Edge Networks. "We believe this transaction benefits
customers, investors and employees of both companies."
Under the terms of the agreement, EarthLink will acquire 100 percent of
New Edge Networks in a merger transaction for approximately $144 million,
consisting of 2.6 million shares of EarthLink common stock and $114.3 million
in cash, including cash to be used to satisfy certain liabilities. The
acquisition, which is subject to regulatory approvals and customary closing
conditions, is expected to close in the first quarter of 2006.
EarthLink plans to retain New Edge Networks' 345 employees and the New
Edge Networks brand and operate the company as a wholly-owned subsidiary of
EarthLink. New Edge Networks will continue to be based in Vancouver, Wash.
With more than 20 years in the telecommunications industry, Dan Moffat will
remain as president of New Edge Networks after the acquisition is completed.
For more information, visit http://www.earthlink.net.
Conference Call for Analysts and Investors
Investors in the U.S. and Canada interested in participating in the
conference call on December 13, 2005 at 10:00 a.m. Eastern Standard Time (EST)
may dial 1-800-706-0730 and reference the EarthLink call. Other international
investors may dial 1-706-634-5173 and also reference the EarthLink call.
EarthLink recommends dialing into the call approximately 10 minutes prior to
the scheduled start time.
EarthLink will use a PowerPoint presentation during this call. This
presentation can be viewed by following the link below:
https://www.livemeeting.com/cc/vcc-
ic01/join?id=ic01EarthLink&role=attend&pw=EarthLink. Due to length of URL,
please cut and paste into browser.
A replay of the PowerPoint presentation with audio will be available on
our website beginning at 12:30 p.m. EST on December 13, 2005 through midnight
on December 20, 2005 by dialing
1-800-642-1687. International callers should dial 1-706-645-9291. The replay
confirmation code is 3375230.
A replay of the powerpoint presentation with audio will be available on
our website at beginning at 12:30 p.m. EST on December 13, 2005 through
midnight on December 20, 2005 located at:
http://phx.corporate-ir.net/phoenix.zhtml?c=77594&p=irol-audioArchives.
About New Edge Networks
New Edge Networks builds and manages broadband networks for businesses and
communications carriers. Through its nationwide network of more than 850
switches and Internet routers, New Edge Networks uses various broadband access
technologies for building business networks. These include all types of DSL,
Frame Relay, ATM, cable modems, and Satellite. Its network coverage reaches
100 percent of U. S. business addresses. New Edge Networks' product suite of
managed WAN and VPN services received Frost & Sullivan's Telecommunications
Services 2005 Product of the Year Award. New Edge Networks is on the 2005
list of the 500 fastest growing companies compiled by Deloitte & Touche and
Inc. magazine. The company's Web site is http://www.newedgenetworks.com.
Telephone: 1-360-693-9009.
About EarthLink
"EarthLink. We revolve around you(TM)." As the nation's next generation
Internet service provider, Atlanta-based EarthLink has earned an award-winning
reputation for outstanding customer service and its suite of online products
and services. Serving over five million subscribers, EarthLink offers what
every user should expect from their Internet experience: high-quality
connectivity, minimal online intrusions, and customizable features. Whether
it's dial-up, high-speed, voice, web hosting, wireless or "EarthLink Extras"
like home networking or security, EarthLink provides the tools that best let
individuals use and enjoy the Internet on their own terms. Learn more about
EarthLink by calling (800) EARTHLINK or visiting EarthLink's Web site at
http://www.EarthLink.net.
Cautionary Information Regarding Forward-Looking Statements
This press release includes "forward-looking" statements (rather than
historical facts) that are subject to risks and uncertainties that could cause
actual results to differ materially from those described. Although we believe
that the expectations expressed in these forward-looking statements are
reasonable, we cannot promise that our expectations will turn out to be
correct. Our actual results could be materially different from and worse than
our expectations. We disclaim any obligation to update any forward-looking
statements contained herein, except as may be required pursuant to applicable
law. With respect to forward-looking statements in this press release, the
company seeks the protections afforded by the Private Securities Litigation
Reform Act of 1995. These risks include, without limitation, (1) that we may
not be able to successfully implement our broadband strategy which would
materially and adversely affect our subscriber growth rates, future overall
revenues and profitability; (2) that we may not successfully enhance existing
or develop new products and services in a cost-effective manner to meet
customer demand in the rapidly evolving market for Internet, wireless and
wireline communications services, including our various voice and municipal
broadband network initiatives; (3) that our service offerings may fail to be
competitive with existing and new competitors; (4) that competitive product,
price, or marketing pressures could cause us to lose existing customers to
competitors, or may cause us to reduce prices for our services which would
adversely impact average revenue per user; (5) that our commercial and
alliance arrangements, including marketing arrangements with Sprint and Dell,
may be terminated or may not be as beneficial to us as we anticipate; (6) that
the continued decline of our narrowband revenues may adversely affect us; (7)
that we may experience significant fluctuations in our operating results and
rate of growth and we may not be able to sustain profitability; (8) that our
third-party network providers may be unwilling or unable to provide Internet,
wireline and wireless telecommunications access; (9) that we may be unable to
maintain or increase our customer levels if we do not have uninterrupted and
reasonably priced access to local and long distance telecommunications systems
for delivering dial-up and/or broadband access, including, specifically, that
integrated local exchange carriers and cable companies may not provide last
mile broadband access to us on a wholesale basis or on terms or at prices that
allow us to grow and be profitable in the broadband market, especially as a
result of the recent U.S. Supreme Court ruling and FCC order concerning
wholesale broadband access; (10) that service interruptions or impediments
could harm our business; (11) that we may not be able to protect our
proprietary technologies or successfully defend infringement claims and may be
required to enter licensing arrangements on unfavorable terms; (12) that we
may be accused of infringing upon the intellectual property rights of third
parties, which is costly to defend and could limit our ability to use certain
technologies in the future; (13) that government regulations could force us to
change our business practices; (14) that we may not realize the benefits we
are seeking from the Helio joint venture transaction, the New Edge Networks
acquisition or other investment activities as a result of lower than predicted
revenues or subscriber levels of the companies in which we invest or acquire,
larger funding requirements for those companies or otherwise; (15) that our
third-party providers for technical and customer support and billing services
may be unable to provide these services on an economical basis or at all; (16)
that if we are unable to successfully defend against legal actions, we could
face substantial liabilities; (17) that we may be unable to continually
develop effective business systems, processes and personnel to support our
business; (18) that we may be unable to hire and retain qualified personnel,
including our key executive officers; (19) that provisions in our certificate
of incorporation, bylaws and shareholder rights plan could limit our share
price and delay a change of management; (20) that our stock price has been
volatile historically and may continue to be volatile; and (21) that some
other unforeseen difficulties may occur. This list is intended to identify
some of the principal factors that could cause actual results to differ
materially from those described in the forward-looking statements included
herein. These factors are not intended to represent a complete list of all
risks and uncertainties inherent in the company's business, and should be read
in conjunction with the more detailed cautionary statements and risk factors
included in EarthLink's filings with the Securities and Exchange Commission.
Additional Information about the Acquisition
In connection with EarthLink's proposed acquisition of New Edge Networks,
EarthLink will file with the Securities and Exchange Commission (the "SEC") a
Registration Statement on Form S-4 and New Edge Networks will file with the
SEC an information statement, each of which will contain the information
statement/prospectus of New Edge Networks and EarthLink in addition to other
relevant documents concerning the acquisition. We urge investors to read the
information statement/prospectus and any other relevant documents when they
become available because they will contain important information about New
Edge Networks, EarthLink and the acquisition. Investors will be able to
obtain the documents free of charge at the SEC's web site, http://www.sec.gov.
In addition, documents filed with the SEC by EarthLink can be obtained at
http://www.sec.gov or by contacting EarthLink at the following address and
telephone number: 1375 Peachtree Street, Atlanta, Georgia 30309,
(404) 815-0770. Documents filed by New Edge Networks with the SEC can be
obtained by contacting New Edge Networks at the following address and
telephone number: 3000 Columbia House Blvd., Suite 106, Vancouver, Washington
98661, (360) 693-9009. We urge you to read the information
statement/prospectus and any other relevant documents when they become
available.
SOURCE EarthLink, Inc.
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Related links:
http://www.earthlink.net
http://www.newedgenetworks.com http://www.sec.gov
CONTACT:
Media, Dan Greenfield of EarthLink,
+1-404-748-7436, or mobile, +1-404-432-6526, or
greenfie@corp.earthlink.net; or Sal Cinquegrani of New Edge
Networks, +1-360-906-9723, or mobile, +1-847-420-1750, or
scinquegrani@newedgenetworks.com; or Investors, Michael
Gallentine of EarthLink, +1-404-748-7153, or mobile,
+1-404-395-5155, or gallentineml@corp.earthlink.net
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