Exhibit 99.1
EARTHLINK PRICES $225 MILLION CONVERTIBLE SENIOR NOTES
Atlanta, November 14, 2006 - EarthLink, Inc. (Nasdaq: ELNK) announced today the pricing of its underwritten public offering of $225,000,000 aggregate principal amount of 3.25% Convertible Senior Notes due 2026. As part of the offering, EarthLink has also granted the underwriters an over-allotment option to purchase up to an additional $33,750,000 aggregate principal amount of notes, which option will be exercisable within 30 days of pricing.
The notes will pay interest semiannually at a rate of 3.25% per annum until November 15, 2011, and at a rate of 3.50% per annum thereafter. The notes will be convertible, at the holder’s option, at an initial conversion rate of 109.6491 shares of common stock per $1,000 principal amount of notes (or an initial conversion price of approximately $9.12 per share of common stock), subject to adjustment upon the occurrence of certain events. The initial conversion price represents a conversion premium of approximately 42.50% over the closing sale price of our common stock on November 13, 2006, which was $6.40 per share. Upon conversion, holders will receive cash up to the principal amount of the notes to be converted, and any excess conversion value will be delivered, at EarthLink’s election, in cash, shares of common stock or a combination of cash and shares of common stock. Beginning on November 15, 2011, EarthLink may redeem some or all of the notes at a redemption price equal to the principal amount of the notes to be redeemed, plus accrued and unpaid interest, if any. In addition, on November 15, 2011, November 15, 2016 and November 15, 2021, and upon a fundamental change, holders may require EarthLink to repurchase their notes at a purchase price equal to the principal amount of the notes to be repurchased, plus accrued and unpaid interest, if any. The notes will be senior unsecured obligations of EarthLink.
EarthLink estimates that the net proceeds from this offering will be approximately $218.4 million after deducting the underwriters’ discounts and commissions and estimated offering expenses (or approximately $251.2 million if the underwriters’ over-allotment option is exercised in full). The offering is expected to close on November 17, 2006, subject to customary closing conditions.
EarthLink will use a portion of the proceeds from the offering to fund convertible note hedge transactions that EarthLink has entered into with affiliates of each of the underwriters. Remaining proceeds will be used for general corporate purposes. Although no commitments or agreements have currently been made for any such purposes, they could include future investments in EarthLink’s various strategic growth initiatives. They could also include future share repurchases.
UBS Securities LLC and Banc of America Securities LLC are acting as joint book-running managers of the offering.
This press release does not constitute an offer to sell or solicitation of an offer to buy these securities, nor shall there be any sale of these securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state.
A registration statement (including a prospectus) and prospectus supplement related to the offering have been filed with the Securities and Exchange Commission and will be available on the SEC’s website www.sec.gov. Printed copies of the prospectus and prospectus supplement relating to the offering may also be obtained from UBS Securities LLC, Attention: Prospectus Department, 299 Park Avenue, New York, New York, 10171 or Banc of America Securities LLC, Attention: Capital Markets Operations, 100 West 33rd Street, 3rd Floor, New York, NY 10001.
About EarthLink
“EarthLink. We revolve around you™.” 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 connects people to the power and possibilities of the Internet.
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 be unable to successfully enhance existing or develop or offer new products and services in a cost-effective or timely manner to meet customer demand in the rapidly evolving market for Internet, wireless and IP-based communications services, including new products and services offered in connection with our voice and municipal broadband network initiatives; (2) that we may not realize the benefits we are seeking from our investments in the HELIO joint venture or our other investment activities, as a result of lower than predicted revenues or subscriber levels of the companies in which we invest, larger funding requirements for those companies or otherwise; (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 we may experience significant fluctuations in our operating results and rate of growth and may not be profitable in the future; (6) that we may not be successful in making and integrating acquisitions and investments into our business, which could result in operating difficulties; (7) that the continued decline of our narrowband revenues would adversely affect us; (8) that we may not be able to successfully execute our broadband strategy which could materially and adversely affect our subscriber growth rates, future overall revenues and profitability; (9) that we may be unable to maintain or increase our customer levels if ILECs and cable companies do 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 U.S. Supreme Court ruling and FCC order concerning wholesale broadband access; (10) that our commercial, marketing and other alliance arrangements, may not be renewed, may be terminated, or may not be as beneficial to us as we anticipate; (11) that the market for VoIP services may not develop as anticipated; (12) that we may not generate the returns anticipated on our
investments to construct and deploy municipal wireless broadband networks; (13) that our third-party network providers may be unwilling or unable to provide Internet, wireline and wireless telecommunications access; (14) 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; (15) that service interruptions or impediments could harm our business; (16) that business failures and mergers in the telecommunications industry may inhibit our ability to manage our costs; (17) that government regulations could force us to change our business practices; (18) that we may be unable to protect our proprietary technologies or successfully defend infringement claims and that we may be required to enter licensing arrangements on unfavorable terms; (19) 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; (20) that we could face substantial liabilities if we are unable to successfully defend against legal actions; (21) that we may not be able to continually develop effective business systems, processes and personnel to support our business; (22) that we may be unable to hire and retain qualified personnel, including our key executive officers; (23) that our stock price has been volatile and may continue to be volatile; (24) that provisions in our certificate of incorporation, bylaws and shareholder rights plan could limit our share price and delay a change of management; and (25) that some other unforeseen difficulties may occur. These risks and uncertainties, as well as other risks and uncertainties that could cause our actual results to differ significantly from management’s expectations, are not intended to represent a complete list of all risks and uncertainties inherent in our business, and should be read in conjunction with the more detailed cautionary statements and risk factors included in our Annual Report on Form 10-K for the year ended December 31, 2005.
