-- COMPANY SECURES US$150 MILLION IN NEW CREDIT FACILITIES --
VANCOUVER, June 6, 2012 /CNW/ - PEER 1 Network Enterprises, Inc. (TSX:PIX), operating as PEER 1 Hosting ("PEER 1" or the "Company"), a leading provider of IT infrastructure, today announced it has signed a definitive agreement to acquire all of the outstanding shares in the capital of NetBenefit (UK) Limited ("NetBenefit"), a division of London-based Group NBT Limited, and a leading UK-based managed hosting company, for cash consideration of GBP25 million (US$38.5 million).
- The fully funded, all cash US$38.5 million transaction establishes PEER 1 as a leader in the UK managed hosting market;
- The transaction is expected to deliver substantial financial benefits through the integration and migration of NetBenefit's business and servers into PEER 1's new 57,800 square foot flagship datacenter in the UK;
- The transaction is expected to be immediately accretive to PEER 1's earnings per share excluding acquisition-related and integration costs;
- PEER 1 will finance the acquisition with cash on hand and availability under the Company's existing credit facilities, including a US$25 million accordion facility that National Bank Financial Inc. ("NBF") has underwritten in support of the acquisition; and
- Closing of the transaction is expected to occur on or before June 30, 2012.
"This transaction vaults us into a clear leadership position in the UK managed hosting market and further underscores our commitment to the dynamic and growing EMEA region," said Fabio M. Banducci, President and CEO of PEER 1. "NetBenefit shares our passion and reputation for quality and service and we are thrilled to welcome its employees, customers and other stakeholders to the PEER 1 Hosting family. We believe our combined operating scale will allow us to market our shared leading-edge solutions to an even broader customer base across the EMEA region."
Founded in 1995, NetBenefit is a division of London-based Group NBT Limited and is one of the UK's longest-operating and most experienced providers of managed hosting services to small and medium sized businesses. NetBenefit has approximately 50 employees providing nearly 700 customers with hosting solutions and professional 24 x 7 x 365 technical support, provisioned and deployed principally from two leased datacenters located in the Greater London area. For the fiscal year ending June 30, 2012, NetBenefit is forecast to generate approximately US$12.5 million in revenue and US$3.8 million in EBITDA. Following the acquisition, NetBenefit will provide managed hosting services back to Group NBT under a three year contract valued at approximately GBP1.5 million (US$2.3 million) per year.
With PEER 1's established operating presence in the UK and the opening of its 57,800 square foot green flagship datacenter in Portsmouth last fall, the Company has identified material cost synergies that can be realized from this acquisition, principally from datacenter lease cost savings, office rent savings, reduced support costs and certain headcount rationalization. PEER 1 plans to migrate NetBenefit's server deployments from their existing leased datacenter space to PEER 1's new wholly-owned datacenter on expiration of the datacenter leases. These cost synergies are expected to amount to approximately US$2.0 million and should be fully realized within 18 months following closing of the acquisition.
The Company expects to incur approximately US$2.6 million in one-time transaction, re-financing, and transition and integration costs, with the majority of these costs being recorded in the current fiscal fourth quarter and the first quarter of fiscal year 2013.
PEER 1 also announced today it has entered into an arrangement letter with NBF to act as sole lead arranger to syndicate US$150 million in new credit facilities. The new facilities will comprise a US$100 million committed term loan facility and a $US50 million committed revolving credit facility. In addition, the credit agreement will also include an un-committed accordion feature that will provide PEER 1 with up to a further USD $25 million, bringing the total potential credit available under the new credit facilities to US$175 million. The credit facilities are subject to completion of NBF's syndication, the preparation, execution and delivery of mutually acceptable amended and restated loan documentation, and other customary conditions and closing is expected to occur on June 30, 2012. The Company intends to use the proceeds of the new credit facilities for the repayment of existing credit facilities, capital expenditures, permitted acquisitions, and for working capital and general corporate purposes. "Securing increased credit facilities on favourable terms ensures we retain access to non-dilutive capital, providing us with the financial flexibility to act on further opportunities in the wake of this transaction," said Gary N. Sherlock, Executive Vice President and Chief Financial Officer of PEER 1. "We continue to evaluate an array of initiatives to grow both organically and through acquisition in multiple geographies, domestic and international."
Conference Call and Webcast Details
PEER 1 will hold a conference call on Wednesday, June 6, 2012 at 11:00 a.m. Eastern Time, to provide further details on the transaction.
To access the conference call by telephone, dial (647) 427-7450 or 1-888-231-8191. The conference call will be archived for replay until Wednesday June 13, 2012, at midnight. To access the archived conference call, dial (416) 849-0833 or 1-855-859-2056 and enter the reservation number 88591106 followed by the number sign.
A live audio webcast of the conference call and slide presentation will be available at: http://event.on24.com/r.htm?e=471933&s=1&k=BD609A5D10EF33E9240AD7AD1B640257. Please connect at least 10 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast. The webcast will be archived at the above website for 90 days.
Established in 1995, NetBenefit is one of the UK's most experienced managed hosting companies. NetBenefit specialises in providing tailored managed hosting solutions that deliver security, resilience and online performance for business critical websites, applications and online advertising campaigns. NetBenefit has evolved with the internet to its current position today as a leading provider of bespoke, flexible managed hosting solutions to well known brands, while remaining small enough to be committed to the success of all its customers. Net Benefit's team consists of experienced consultants, pre-sales, project managers, technical architects and engineers, dedicated to helping guarantee the online success of customer businesses. They are focused on delivering hosting peace of mind so that customers can focus on what they do best.
About PEER 1 Hosting
PEER 1 Hosting is one of the world's leading IT hosting providers. The company is built on two obsessions: Ping & People. Ping, represents its commitment to best-in-breed technology, founded on a high performance 10Gbps FastFiber Network™ connected by 18 state-of-the-art datacenters, 22 points-of-presence and 10 colocation facilities throughout North America and Europe. People, represents its commitment to delivering outstanding customer service to its more than 10,000 customers worldwide, backed by a 100 percent uptime guarantee and 24x7x365 FirstCall Support™. Info-Tech Research Group recently named PEER 1 Hosting as a "Champion" in its Canadian colocation and managed services Vendor Landscape report, recognizing the company's strength in product offerings and enterprise strategy in the global IT marketplace. PEER 1 Hosting's portfolio includes Managed Hosting, Dedicated Servers under the ServerBeach brand, Colocation and Cloud Services under the Zunicore brand. Founded in 1999, the company is headquartered in Vancouver, Canada, with European operations headquartered in Southampton, UK. PEER 1 Hosting shares are traded on the TSX under the symbol PIX. For more information visit: www.peer1.com or www.peer1hosting.co.uk.
Forward Looking Statements
Statements in this release relating to matters that are not historical fact are forward-looking statements based on current expectations, forecasts and assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially. Factors that could cause or contribute to such differences include, but are not limited to, the transaction might not close, the potential impact on the business of NetBenefit due to the uncertainty about the acquisition, the retention of key employees of NetBenefit, the ability of PEER 1 to successfully integrate NetBenefit and to achieve the anticipated synergies, general economic conditions, changes in technology, managing rapid growth, global sales risks, limited intellectual property protection and other risks and uncertainties described in PEER 1's public filings with securities regulatory authorities. Any forward looking statements in this release are based on the information about NetBenefit currently available to PEER 1, which is subject to change, and PEER 1 will not necessarily update the information, except as required by law.
For further information:
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PEER 1 Hosting
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