WAM!NET Will Raise $115 Million, Military Contract Will Reach at Least $750 Million
Press release from the issuing company
7/31/01 (WhatTheyThink.com) WAM!NET is on the verge of securing the much needed financing to bring the company to profitability. The company has also specified the amount of their government contract with the Navy and Marine Corps.
WhatTheyThink.com reported in June that a letter of intent had actually been signed with a financing company. Details have been scarce including the amount and future revenue potential for WAM!NET.
Jason Thunstrom, spokesman for WAM!NET told WhatTheyThink.com today that the company plans to raise $115 million with the new funding. “We have indicated the financing will be around $115 million. This funding will bring us to profitability and will be the last round needed for WAM!NET. The deal should bring us to cash flow positive by mid-2002.”
Thunstrom said WAM!NET has filed a Solicitation of Consent to it’s bond holders which will basically grant permission to WAM!NET to do the deal. “We have sent the Solicitation of Consent to all the bond holders and given an August 7th deadline for a response. We are confident we will secure the 51% approval we need.”
The financing also hinges on a pending arrangement with Winstar. Winstar was a major backer of WAM!NET, but went bankrupt. WAM!NET claimed Winstar defaulted on agreed obligations and wrote off some $230 million in debt last quarter. Thunstrom says they have reached an understanding with Winstar and that the matter will not hold up the financing. “We should close this in August, assuming consent and final negotiations with Winstar.”
The firm that will provide the $115 million is Cerberus Capital Management out of New York. Cerberus holds about 40% of the bonds which means WAM!NET really only needs another 11% of the vote to close the financing.
WAM!NET also revealed to WhatTheyThink.com the size of their military contract. While most of it appears to be "back ended" it could reach nearly $1 billion over 5 years. “We have estimated the deal to bring a minimum of $750 million over 5 years to WAM!NET and up to $900 million. Considering we reported $40 million in revenue last year, there is tremendous up side going forward.” WAM!NET also has 3 one year renewal options after the contract.
WAM!NET is a global provider of information technology and digital media solutions. WAM!NET's services, which include managed network, data storage, hosting and application services, are delivered in a utility-like model via the company's highly integrated IT platform, enabling commercial and government customers to access the combination of IT services they need on a transactional basis. In doing so, customers are united with their community of interest, which collaborates to specify, create, print, store, broadcast and distribute content within WAM!NET's online, secure digital environment.
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