Shareholders in ITXC, which has a current market value of $163.2 million, will receive 28% of the equity in the combined company.
The deal represents a remarkable resurrection for Canada-based Teleglobe Inc, which filed for bankruptcy protection in May 2001, joining the long list of major telecoms companies unable to pay their debts. It was relatively small fry in the wave of mass bankruptcies with only about $2.5 billion of debt.
After restructuring and cutting out unprofitable operations, it was bought by investment houses Cerberus Capital Management LP and TenX Capital Partners LLC in May, and intends to seek a Nasdaq quotation.
Teleglobe claims to operate one of the most extensive global networks that extends to more than 240 countries. Apart from undersea links and terrestrial cable systems, it boasts that it is one of the largest providers of satellite capacity connecting to the Internet.
With the migration of voice traffic from fixed-line switched networks to wireless and IP networks, Teleglobe sees big advantages in gaining access to ITXC’s VoIP and routing capabilities.
Combined revenue of the two companies in the quarter to September 30 was $286.8 million and over $88.8 million in cash and equivalents. Teleglobe sees the merger providing substantial savings, particularly by the application of ITXC’s automated technology to Teleglobe’s older back-office processes. The combined company expects to have positive cash flow by the end of 2004.
This article was based on material originally published by ComputerWire.
