UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
For the month of February 2004
Commission File Number 000-50556
Viatel Holding (Bermuda) Limited
(Translation of registrant's name into English)
Inbucon House
Wick Road
Egham, Surrey TW20 0HR
United Kingdom
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F.
Form 20-F [X] Form 40-F [ ]
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(1): ____
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(7): ____
Indicate by check mark whether by furnishing the information contained in this
Form, the registrant is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes [ ] No [X]
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b): 82- ________
Attached and incorporated by reference in this Form 6-K are a form of the
Term Sheet for a proposed financing of Viatel Holding (Bermuda) Limited and
the related Press Release.
Exhibit No. Description
99.1 Term Sheet
99.2 Press Release
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
Undersigned, thereunto duly authorized.
By: /s/ Stephen Grist
_____________________
Name: Stephen Grist
Title: Chief Financial Officer
Date: February 9, 2004
EXHIBIT INDEX
Exhibit No. Description
99.1 Term Sheet
99.2 Press Release
Exhibit 99.1
VIATEL HOLDING (BERMUDA) LIMITED
PRELIMINARY TERM SHEET
ISSUER: Viatel Holding (Bermuda) Limited (the "Company").
ISSUE: 8% Convertible Senior Secured Notes Due 2014 (the
"Notes," and the purchase of the Notes, the
"Investment").
INVESTMENT AMOUNT: US$50 million. Consideration is being given to a
total Investment Amount of US$60 million.
PURCHASERS (AND AMOUNT Morgan Stanley & Co. Incorporated (US$33.65
TO BE PURCHASED): million) ("Morgan Stanley") and Ahab Capital
Management, Inc. (US$3.35 million), CFSC Wayland
Advisers, Inc. (US$3 million) and Varde Partners,
Inc. and certain affiliated entities (US$10
million) (collectively, the "Minority Investors"
and, together with Morgan Stanley, the
"Investors").
In conjunction with its ownership of Notes, each
Investor shall, at all times during which it is a
Noteholder, own at least one Ordinary Share (as
defined below).(1)
DOCUMENTATION: o Investment Agreement by and among the Company
and the Investors.
o Newly issued debt securities evidencing the
Notes, along with related and ancillary
agreements and instruments (including, as
appropriate, an indenture and pledge, guarantee
and security agreements as contemplated below).
o Registration Rights Agreement.
o Bye-Law Amendments as contemplated below.
o Shareholders Agreement.
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(1) Note: This provision will not be applicable if a new class of ordinary
shares is created and issued to the Investors in connection with the
transaction.
INTEREST: 8% per annum, compounded semi-annually and payable
semi-annually in additional Notes or, at the
option of the Company, in cash.
MATURITY DATE: Tenth anniversary of issuance.
PAYMENT AT MATURITY: The outstanding principal amount under the Notes,
along with any accrued and unpaid interest, will
be payable in its entirety on the Maturity Date.
CONVERSION: The Notes will be convertible, at the option of
the Noteholder, into ordinary shares of the
Company, par value US$0.01 per share (the
"Ordinary Shares"):
(1) upon the occurrence of a "Liquidity Event"
(as defined herein); or
(2) if no Liquidity Event has occurred prior to
such time, from and after the ninth
anniversary of the closing date.
Notes and accrued and unpaid interest thereon may
be converted in whole or in part, at a conversion
price (the "Conversion Price"):
(1) determined by reference to the schedule
attached as Annex A, in the case of
conversion upon the occurrence of a Liquidity
Event (other than a Liquidity Event described
in clause (6) of the definition of Liquidity
Event); and
(2) in the case of conversion in the absence of a
Liquidity Event, or in the event of a
Liquidity Event described in clause (6) of
the definition of Liquidity Event, equal to
US$0.75 (the "Base Conversion Price"). The
Base Conversion Price shall also apply in the
context of any other reference to a
conversion price to be applied prior to a
Liquidity Event (e.g., for determining
beneficial ownership of Ordinary Shares into
which Notes may be converted).
LIQUIDITY EVENTS Liquidity Events shall include the following:
(1) if (A) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934 (the "Exchange Act")),
other than one or more Original Holders
(which will be
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defined in the Investment Agreement to
include the Investors and their Affiliates),
is or becomes the beneficial owner (as
defined in Rules 13d-3 and 13d-5 under the
Exchange Act, except that such person shall
be deemed to have "beneficial ownership" of
all shares that any such person has the right
to acquire, whether such right is exercisable
immediately or only after the passage of time
or upon the occurrence of an event, including
all Ordinary Shares issuable upon conversion
of the Notes), directly or indirectly, of
more than 50% of the total voting power of
the Company (or its successor by merger,
consolidation or purchase of all or
substantially all of its assets) (for the
purpose of this clause, such person shall be
deemed to beneficially own any voting stock
of the Company held by an entity, if such
person "beneficially owns" (as defined
above), directly or indirectly, more than 50%
of the voting power of such entity) and (B)
the Original Holders beneficially own (as
defined above), directly or indirectly, in
the aggregate a lesser percentage of the
total voting power of the Company (or such
successor) than such other person (for the
purposes of this clause, such other person
shall be deemed to beneficially own any
voting stock of a specified entity held by an
entity, if such other person "beneficially
owns," directly or indirectly, more than 50%
of the voting power of such parent entity and
the Original Holders "beneficially own,"
directly or indirectly, in the aggregate a
lesser percentage of the voting power of such
entity). In this event, the Board of
Directors of the Company will determine the
Fair Market Value of the Company.
(2) if:
(A) any "person" (as defined above)
(x) other than, or
(y) if, no later than 60 business days
following the Event Date (as defined
below), the Board of Directors of the
Company (with the Directors that are
affiliated with Noteholders abstaining)
notifies the Noteholders that it desires
such event to be a Liquidity Event,
including
any of the Original Holders, is or
becomes the beneficial owner (as defined
above, except that solely for purposes
of this clause (2) such person shall be
deemed not to have "beneficial
ownership" of any shares that any such
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person has the right to acquire, whether
such right is exercisable immediately or
only after the passage of time or upon
the occurrence of an event, through
conversion of the Notes), directly or
indirectly, of more than 35% of the
outstanding Ordinary Shares of the
Company (or its successor by merger,
consolidation or purchase of all or
substantially all of its assets) (for
the purpose of this clause, such person
shall be deemed to beneficially own any
voting stock of the Company held by an
entity, if such person "beneficially
owns" (as defined above), directly or
indirectly, more than 35% of the voting
power of such entity) (the date of such
event or occurrence being referred to
herein as the "Event Date"); and
(B) in either such case, holders of a
majority in principal amount of the
Notes agree in writing (within 60
business days following receipt of
written notice of the Event Date,
together with notice of the proposed
Conversion Price) that such event shall
be deemed a Liquidity Event.
(3) the adoption by the shareholders of the
Company of a plan or proposal for the
liquidation or dissolution of the Company,
provided that holders of a majority in
principal amount of the Notes then
outstanding agree in writing (no later than
20 business days following receipt of written
notice of adoption of such plan or proposal)
that such event shall be deemed a Liquidity
Event;
(4) consummation of a scheme of arrangement,
reorganization, merger, statutory share
exchange or consolidation or similar
corporate transaction involving the Company
or any of its subsidiaries, a sale or other
disposition of all or substantially all of
the assets of the Company, or the acquisition
of the assets or stock of another entity by
the Company or any of its subsidiaries (each,
a "Business Combination"), in each case
unless, following such Business Combination,
(A) all or substantially all of the
individuals and entities that were the
beneficial owners of the Ordinary Shares (or
of options, warrants, rights or other
securities convertible into or exercisable
for Ordinary Shares) of the Company
immediately prior to such Business
Combination beneficially own, directly or
indirectly, more than 67% of the
then-outstanding voting power of the
corporation resulting from such Business
Combination in substantially the same
proportion as their ownership immediately
prior to such Business Combination of the
outstanding Ordinary Shares (or options,
warrants, rights
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or other securities convertible into or
exercisable for Ordinary Shares) of the
Company and (B) no person (excluding any
corporation resulting from such Business
Combination or any employee benefit plan or
related trust of the Company or such
corporation resulting from such Business
Combination) beneficially owns, directly or
indirectly, 20% or more (on a fully-diluted
basis) of the voting power of the corporation
resulting from such Business Combination,
except to the extent that such ownership
existed prior to the Business Combination.
(5) if the Company effects a public offering for
cash of an amount of its Ordinary Shares
equal to at least 20% of the Ordinary Shares
of the Company and, following such offering,
the Ordinary Shares of the Company are
registered with the U.S. Securities and
Exchange Commission pursuant to the Exchange
Act or traded either on a U.S. or foreign
securities exchange or in the National
Association of Securities Dealers Automated
Quotation System.
(6) there occurs an Event of Default or an Event
of Default is threatened by the Company,
provided that holders of a majority in
principal amount of the Notes then
outstanding agree in writing (within 20
business days following receipt of written
notice thereof) that such event shall be
deemed a Liquidity Event.
COMPANY EXCHANGE RIGHT At any time
(A) prior to the date that a majority of the
initial principal amount of the Notes has
been converted into Ordinary Shares (the
"Conversion Date"), if (i) there has occurred
a Liquidity Event and (ii) the Company has
received written consent to the exchange of
all Notes from the holders of a majority of
the principal amount of the Notes outstanding
and held by Investors at the time of the
receipt of such consent; or
(B) following the Conversion Date,
the Company shall be entitled, at its option and
upon 30 days' prior written notice to holders of
the Notes, to exchange the Notes in whole but not
in part for Ordinary Shares at the then-applicable
Conversion Price.
In the event of a change of control, as described
below, the exchange right will not become
effective until after the Noteholders have had the
opportunity to sell their Notes to the Company
pursuant to the Change of Control Put described
below,
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unless the Board of Directors has determined in
good faith that the aggregate applicable COC Put
Price that would be received by Noteholders could
not reasonably be considered to be equal to or
greater than the aggregate value of the Ordinary
Shares that would be received by such Noteholders
upon such exchange.
VALUATION FOR CONVERSION The Board of Directors shall determine the equity
PRICE CALCULATION value of the Company in good faith based on
established practice and in accordance with the
guidelines set forth in Annex B.
RANKING: Except as otherwise required by law, the Notes
will be pari passu with the Accounts Receivable
Facility (the "A/R Facility") to be entered into
by the Company (with outstanding amounts not to
exceed the lesser of US$3 million or 65% of
"eligible receivables" (to be defined)) and senior
to all other indebtedness for borrowed money and
debt securities of the Company and its operating
subsidiaries.
GUARANTEE AND SECURITY: The Notes will be subject to guarantee and
security provisions satisfactory in all respects
to the Investors. The Investors currently
contemplate that, to the extent legally
permissible, the Notes will be (a) guaranteed by
all of the Company's operating subsidiaries (the
"Guarantors") and (b) secured by liens on
substantially all of the assets of the Company and
the Guarantors (including, as to the Company, a
pledge of all of the issued and outstanding equity
of the Guarantors but excluding the accounts
receivable of the Company and of the Guarantors
securing the A/R Facility). The Investors also
contemplate that a security trustee will hold the
security in trust for the Noteholders. The Company
has presented for review by the Investors a
proposed alternative structure.
VOTING RIGHTS: Except as set forth below with respect to
"Increase in Number of Directors and Amendments to
Bye-Laws" and "Covenants," holders of the Notes as
such will have no voting rights. Holders of
Ordinary Shares issued upon conversion of Notes
will have the voting rights intrinsic to such
Ordinary Shares.
INFORMATION RIGHTS: The Company will furnish to each Noteholder, and
to each person that holds Ordinary Shares acquired
upon exercise of the Notes (a "Qualified
Shareholder"):
(1) Prior to the time that a Trading Market (as
defined below)
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exists, monthly management reports of the
Company, in form and substance consistent
with those reports currently furnished to
directors, within 30 days after the end of
each month;
(2) Annual consolidated (and, prior to the time
that a Trading Market exists,
non-consolidated) financial statements of the
Company, audited by an internationally
recognized accounting firm, within 120 days
after the end of each fiscal year; and
(3) Copies of all filings made under the
securities laws of Bermuda, the United States
and any other applicable jurisdiction, and
copies of all filings made under the rules of
any stock exchanges or other applicable self
regulatory organizations, to the extent such
filings are not otherwise promptly and
readily available to the public.
A "Trading Market" will be deemed to exist if the
Ordinary Shares are (i) registered under the
Exchange Act or comparable securities laws of the
United Kingdom and (ii) listed on the New York
Stock Exchange or the London Stock Exchange or
traded on the NASDAQ Standard 3 Marketplace, or
are otherwise traded in a manner that has been
determined to be a Trading Market by the Board of
Directors of the Company with the consent of
either (x) prior to the Conversion Date, holders
of a majority in principal amount of the Notes
outstanding at the time that such consent is
given, or (y) following the Conversion Date,
holders of a majority of the Ordinary Shares of
the Company held by Qualified Shareholders.
CONFIDENTIAL INFORMATION The Shareholders Agreement will contain customary
RECEIVED BY NOTEHOLDERS AND restrictions on the disclosure by Noteholders and
QUALIFIED SHAREHOLDERS: Qualified Shareholders of confidential information
regarding the Company. The Shareholders Agreement
will further provide that any Noteholder or
Qualified Shareholder that is eligible to receive
confidential information and that intends to trade
in securities of the Company shall be permitted to
notify the Company of such intention and request
that the Company cease to provide confidential
information (other than Rule 144A information
described below) to such Noteholder or Qualified
Shareholder.
TRANSFERABILITY: The Notes and the Ordinary Shares into which the
Notes are converted may be transferred in
transactions that are exempt from Securities Act
registration under Rule 144A, subject to
compliance with the Right of First Refusal
described below. The Company will make available
to qualifying purchasers for such transactions the
information required to be made available to such
purchasers
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under Rule 144A(d)(4).
The Ordinary Shares into which the Notes are
converted will be transferable subject to any
restrictions on transfer (including any rights of
first refusal) that are or become generally
applicable to holders of Ordinary Shares.
All transferees will be required to become parties
to the Shareholders Agreement.
CHANGE OF CONTROL PUT: Following any "change of control" of the Company
(to be defined in the final documentation), the
Company shall be required to offer to repurchase
each of the Outstanding Notes at a purchase price
in cash equal to 101% of the principal amount
thereof, plus accrued and unpaid interest, if any,
prorated to the date of repurchase (the "COC Put
Price").
Within 5 business days following a change of
control, the Company shall mail a notice to each
Noteholder stating:
(1) that a change of control has occurred and
that such Noteholder has the right to require
the Company to purchase such Noteholder's
Notes at the purchase price stated above;
(2) the repurchase date (which shall be no
earlier than 30 days nor later than 60 days
from the date such notice is mailed); and
(3) the procedures reasonably determined by the
Company, consistent with the terms of the
Notes and related documentation, that a
holder must follow to have its Notes
repurchased.
TAG-ALONG/DRAG-ALONG Each Noteholder and each Qualified Shareholder
RIGHTS: will agree to be subject to tag-along rights in
favor of the other Noteholders and Qualified
Shareholders requiring: (1) in the event of a
proposed transfer, in one or a series of related
transactions (other than to an affiliate), by any
Noteholder, or group of Noteholders, of Notes
having a principal amount of at least US$10
million, all other Noteholders to have the ability
to dispose of (on the same terms and conditions) a
pro rata portion of such Noteholder's Notes, and
(2) at any time that a "Trading Market" does not
exist, in the event of a proposed transfer, in one
or a series of related transactions (other than to
an affiliate), by any Qualified Shareholder of
Ordinary Shares representing at least 10% of the
outstanding Ordinary Shares of the Company (on a
fully diluted
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basis), all other Qualified Shareholders to have
the ability to dispose of (on the same terms and
conditions) a pro rata portion of such Qualified
Shareholder's Ordinary Shares.
The Noteholders and Qualified Shareholders will
also agree to be subject to drag-along rights in
favor of the other Noteholders and Qualified
Shareholders requiring:
(1) at any time that a "Trading Market" does not
exist, in the event of a transfer, in one or
a series of related transactions (other than
to an affiliate), by one or more Qualified
Shareholders of Ordinary Shares representing
a majority of the outstanding Ordinary Shares
of the Company (on a fully diluted basis),
such Qualified Shareholders (if requested by
such selling Investors) to sell (on the same
terms and conditions) a pro rata portion of
the Ordinary Shares owned by such Qualifed
Shareholders; and
(2) in the event of a transfer, in one or a
series of related transactions occurring
prior to the Conversion Date (other than
transfers to an affiliate), by one or more
Noteholder(s) of a majority of the
then-outstanding principal amount of the
Notes, such Noteholders (if requested by such
selling Noteholders) to sell (on the same
terms and conditions) a pro rata portion of
the Notes owned by such Noteholders;
provided, however, that if the purchase price
for such "dragged-along" Notes in such
transaction is less than the COC Put Price
that would be payable if a Change of Control
Put occurred on the date of the closing of
such "drag-along" transaction (the "Minimum
Price"), then the purchase price of such
"dragged-along" Notes shall be increased so
that it equals the Minimum Price.
RIGHT OF FIRST REFUSAL Each Noteholder shall have a right of first
refusal if a Noteholder proposes to sell (a
"Selling Noteholder") any Notes to a non-
affiliated third party (other than pursuant to an
exercise of registration rights or pursuant to an
exercise of tag-along or drag-along rights).
The Selling Noteholder(s) will send a notice (the
"First Refusal Notice") of the transaction to all
of the other Noteholders, including its good faith
intention to transfer Notes to a bona fide third
party, the identity and address of the third
party, the proposed form of consideration, the
number of Notes proposed to be sold, the proposed
sale price and all other material terms of the
transaction. Noteholders will have the ability to
exercise their
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right of first refusal, on a pro rata basis based
on the percentage of Notes held by all Noteholders
other than the Selling Noteholder(s), within 10
business days from receipt of such notice. If the
offer is undersubscribed, each Noteholder electing
to exercise its right of first refusal shall be
able to purchase a pro rata portion of the
remaining Notes offered based on the percentage of
Notes held by such electing Noteholder.
If there are any remaining Notes, the Selling
Noteholder(s) may sell such Notes to the proposed
third party within 120 days after the date by
which the Noteholders must exercise their right of
first refusal. The Selling Noteholders must sell
such Notes at a price, for consideration and on
terms no more favorable than those specified in
the First Refusal Notice. However, any such sale
shall be subject to the Transfer restrictions set
forth in the Agreement. After such 120-day period,
any Transfer of Notes will be again subject to a
right of first refusal.
REGISTRATION RIGHTS: The Company will enter into a Registration Rights
Agreement with each Investor with respect to the
Notes and the Ordinary Shares into which the Notes
can be converted. The Registration Rights
Agreement will provide that each Investor that has
acquired Ordinary Shares upon conversion of Notes
shall be entitled to demand registration, at the
expense of the Company, of all or any portion of
the Ordinary Shares held by such Investor:
(1) at any time that the Company is subject to
the provisions of the Exchange Act, upon the
request of Investors holding at least 10% of
the Ordinary Shares, and
(2) at any time that the Company is not subject
to the provisions of the Exchange Act, upon
the request of Investors holding at least a
majority of the outstanding Ordinary Shares.
The Registration Rights Agreement will provide
that upon the request of holders of at least a
majority of the original principal amount of the
Notes, the Investors shall be entitled to demand
one registration, and each Investor shall be
entitled to include all of its Notes in such
registration. Each Investor shall be entitled to
demand no more than two registrations with respect
to Ordinary Shares, and the Investors in the
aggregate shall be entitled to demand no more than
four registrations with respect to Ordinary
Shares. Investors shall also have customary "piggy
back" rights with respect to other registration
statements filed by the Company. Transferees of
the Notes will be considered Investors for these
purposes.
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INCREASE IN NUMBER OF The Company's Board of Directors shall, in
DIRECTORS AND AMENDMENTS accordance with Bye-Law 83, adopt a resolution
TO BYE-LAWS: increasing the number of Directors on the Board
from six to nine, such increase to be effective
from and after the closing date. The newly created
Board vacancies will be filled by three Directors
to be selected by the Investors. It is currently
contemplated that two of the three Directors to be
selected by the Investors (the "New Independent
Directors") shall have no affiliation to any of
the Investors and shall otherwise qualify as
independent.
In addition to the Bye-Law amendments that were
approved by the Finance Committee of the Board of
Directors and that are described in a proxy
statement of the Company dated 19 November 2003
(the "November Amendments"), the Bye-Laws will be
further amended to delete the proviso that was
added to clause (5) of Bye-Law 97 pursuant to the
November Amendments. The Bye-Laws will be further
amended to provide that:
(1) The number of Directors shall be nine;
provided, however, that (x) at any time
before the Conversion Date, shareholders who
are holders of a majority of the
then-outstanding principal amount of the
Notes (the "Majority Noteholders") may by
written notice to the Company demand, and (y)
for a period commencing on the Conversion
Date and ending on the date on which the
Investors beneficially own less than an
aggregate of 25% of the Ordinary Shares,
holders of a majority of the then-outstanding
Ordinary Shares held by Qualified
Shareholders may by written notice to the
Company demand, that the number of Directors
be increased to any number up to 13, in which
case the number of Directors shall be so
increased and the (x) Majority Noteholders or
(y) holders of a majority of the
then-outstanding Ordinary Shares held by
Qualified Shareholders, as the case may be
and as described in paragraph (2) below,
shall have an immediate power to appoint the
additional Directors resulting from such
increase.
(2) During the period commencing on the closing
date and ending on the Conversion Date, the
Majority Noteholders, and during the period
commencing on the Conversion Date and ending
on the date on which the Investors
beneficially own less than an aggregate of
25% of the Ordinary Shares, holders of a
majority of the Ordinary Shares held by
Qualified Shareholders, will be entitled to
designate, elect, remove and replace (the
"Investor-Appointed Directors") a number of
Directors that is equal to (x) the total
number of
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Directors on the Board of Directors (as
increased in accordance with paragraph (1)
above) minus (y) the total number of
Directors who are on the Board at that time
that are not designated by the Investors in
accordance with this section.
(3) It shall not be necessary to elect the
Investor-Appointed Directors by vote in a
shareholders meeting. Until the Conversion
Date, the Majority Noteholders shall instead
have power to appoint Directors at any time
and from time to time, in accordance with
paragraph (2) above, and to remove any
Directors so appointed by the Majority
Noteholders, in each case by written notice
to the Company secretary. (For these
purposes, the two current directors that are
affiliates of Morgan Stanley are deemed to be
appointed by the Majority Noteholders, and
the New Independent Directors referred to
above are not deemed to be appointed by the
Majority Noteholders.) For the period
commencing on the Conversion Date and ending
on the date on which the Investors
beneficially own less than an aggregate of
25% of the Ordinary Shares, the Qualified
Shareholders shall have the power to appoint
Directors at any time and from time to time,
in accordance with paragraph (2) above, and
to remove any Directors so appointed or
appointed by the Majority Noteholders, in
each case by written notice to the Company
secretary.
(4) Effective from and after the Conversion Date,
in addition to matters otherwise subject to
approval by resolution at a general meeting
of shareholders, the following actions will
require the prior approval of a majority of
the votes of Ordinary Shares cast at a
shareholder meeting or the approval by
written consent of a majority of the Ordinary
Shares without a shareholder meeting:
(a) Any offer, sale or issuance of any debt
or equity securities of the Company or
any of its subsidiaries, other than:
(i) the issuance of Ordinary Shares
upon (A) conversion of the Notes or
(B) exercise of options outstanding
under the equity compensation plan
of the Company (the "Equity Plan")
that is in effect as of the closing
date, that is reasonably acceptable
to the Investors; or
(ii) the entry into the A/R Facility;
(b) Any repurchase or redemption of equity
securities of the
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Company or any of its subsidiaries, or
declaration or payment of any dividend
on the Company's or any subsidiary's
equity securities (other than dividends
to the Company from direct or indirect
wholly owned subsidiaries) or any
increase in the number of shares
reserved under the Company's option
plans;
(c) Incurrence by the Company or any of its
subsidiaries of indebtedness for
borrowed money, or guarantees by the
Company or any of its subsidiaries of
indebtedness for borrowed money, that
would cause the consolidated
indebtedness of the Company and its
subsidiaries to exceed the sum of
amounts that would be permitted under
the A/R Facility and the then-
outstanding principal amount of the
Notes; or the repayment of the
outstanding indebtedness of the Company
or any of its subsidiaries other than in
accordance with the terms thereof;
(d) Transactions between the Company or any
subsidiary, on the one hand, and any
affiliate of the Company or any
subsidiary (other than the Company or
any other subsidiary), on the other
hand, other than compensation of
directors, officers and employees that
has been approved by the Board of
Directors (in the case of directors and
executive officers) or pursuant to Board
approved plans (in the case of other
employees);
(e) Any merger, consolidation,
recapitalization, reorganization,
liquidation or dissolution of the
Company or any subsidiary (other than
any such transaction involving solely an
internal reorganization) or any other
transaction involving the sale, transfer
or other disposition of all or any
substantial portion of the assets of the
Company or any of its subsidiaries;
(f) Any sale, lease, transfer or other
disposition or transfer of assets of the
Company or any subsidiary, in one or a
series of related transactions, having a
value in excess of US$1 million
individually or US$5 million in any
fiscal year;
(g) The grant by the Company or any of its
subsidiaries of a security interest in
any assets, including any pledge, except
for Permitted Liens (to be defined in
the final documentation);
(h) Any acquisition by the Company or any of
its subsidiaries of assets, in one or a
series of related transactions, having a
value in excess of US$2 million;
- 13 -
(i) Hiring or firing the Company's chief
executive officer;
(j) Any amendment to the Company's Bye-Laws
or Memorandum of Incorporation;
(k) Any changes to the size of the Company's
board of directors (other than as
contemplated above); and
(l) Any capital expenditures exceeding US$2
million individually or in excess of
US$6 million in any fiscal year.
As amended, the Bye-Laws will be in the form
attached as Annex C hereto.(2)
SHAREHOLDERS AGREEMENT The Investors and all of their transferees shall
enter into a Shareholders Agreement that will
provide, among other things, that:
(1) at any time (x) prior to the Conversion Date
that one Investor, together with such
Investor's affiliates (collectively, the
"Majority Investor"), holds at least a
majority of the outstanding principal amount
of the Notes, a majority of the outstanding
principal amount of the Notes held by
Investors excluding the aggregate principal
amount of the Notes held by the Majority
Investor shall be sufficient to cause the
designation, election, removal and
replacement of two of the Investor-Appointed
Directors (which directors shall be
identified at the time of the initial
appointment, and are referred to herein as
the "Minority Directors"), and (y) from and
after the Conversion Date (and until such
time as the Minority Investors collectively
beneficially own less than 10% of the
Ordinary Shares of the Company) that one
Investor, together with such Investor's
affiliates holds at least a majority of the
outstanding Ordinary Shares, the Minority
Investors may cause the designation,
election, removal and replacement of such
Minority Directors; and
(2) prior to the occurrence of a Liquidity Event,
any Original Holder that owns more than 35%
of the Ordinary Shares shall vote all
Ordinary Shares owned by such Original Holder
in a manner that is proportionate to the
voting of holders of the remaining Ordinary
Shares.
OBSERVER RIGHTS Until such time as the Minority Investors
collectively beneficially own less than 10% of the
Ordinary Shares of the Company, each
- --------
(2) Annex C to be provided subsequently, but to reflect the terms described
above.
- 14 -
of the Minority Investors shall have the right to
appoint one non-voting representative who shall be
allowed to attend all meetings of the Company's
Board of Directors. The Minority Investors and
their representatives shall sign customary
confidentiality agreements.
ANTI-DILUTION PROVISIONS: The instruments governing the Notes will include
anti-dilution adjustments to the Conversion Price,
including without limitation, upon the occurrence
of:
(1) issuances by the Company of Ordinary Shares
or options, warrants, rights or other
securities convertible into or exercisable
for Ordinary Shares, or of securities
convertible into or exercisable for preferred
shares having economic terms similar to
Ordinary Shares ("Ordinary Equivalents"),
other than exercises of stock options granted
by the Company pursuant to the Equity Plan;
(2) any stock split, reclassification,
subdivision, combination other redistribution
or reclassification of Ordinary Shares or of
Ordinary Equivalents;
(3) declaration of any dividend or other
distribution to holders of the Ordinary
Shares (including distributions of cash,
evidences of the Company's indebtedness and
of any class or series of capital stock or
other property) or to holders of options,
warrants, rights or other securities
convertible into or exercisable for Ordinary
Shares or to holders of Ordinary Equivalents;
or
(4) any repurchase of Ordinary Shares, or of
options, warrants, rights or other securities
convertible into or exercisable for Ordinary
Shares or of Ordinary Equivalents; or
(5) the making by any person of a tender or
exchange offer for Ordinary Shares, or for
options, warrants, rights or other securities
convertible into or exercisable for Ordinary
Shares or for Ordinary Equivalents, at a
price that is in the good faith judgment of
the Board a premium to the market price.
PREEMPTIVE RIGHTS: The Investors, Noteholders and Qualified
Shareholders shall have pro rata preemptive rights
in the event of any sale or issuance of Ordinary
Shares or of options, warrants, rights or other
securities convertible into or exercisable for
Ordinary Shares or of Ordinary Equivalents, based
on beneficial ownership (including with respect to
Notes on as as-converted basis) of all Ordinary
Shares
- 15 -
owned or acquired as of the date of this term
sheet (with respect to securities other than the
Notes) and the date of the closing of the
transactions contemplated hereby (with respect to
Notes) by the Investors, except for issuances of
Ordinary Shares upon conversion of the Notes and
upon the exercise of employee stock options
granted by the Company under the Equity Plan. For
purposes of calculations of preemptive rights, the
conversion price shall be (1) absent a Liquidity
Event, the Base Conversion Price; (2) if a
Liquidity Event has occurred, the conversion price
determined with reference to Annex A hereto. The
preemptive rights shall terminate effective on the
date of the effectiveness of a Liquidity Event.
REPRESENTATIONS AND The Investment Agreement will contain standard
WARRANTIES: representations and warranties, with
indemnification to survive for the later of one
year following closing or three months after
delivery of audited financials for 2004. The
Investment Agreement will also contain interim
operating covenants similar to those set forth
below.
COVENANTS: During the period commencing on the closing date
and ending on the Conversion Date, without the
prior consent of a majority in aggregate principal
amount of outstanding Notes, the Company will not,
and will cause its subsidiaries not to:
(1) offer, sell or issue any debt or equity
securities of the Company or any of its
subsidiaries, other than (A) the issuance of
Ordinary Shares upon conversion of the Notes
or exercise of options outstanding under the
Equity Plan or (B) the entry into the A/R
Facility. [Note: This may involve the
creation of a new class of Company shares to
be held directly by the Investors in
proportion to their ownership of Notes.]
(2) Declare or pay any dividend on the Company's
or any subsidiary's equity securities (other
than dividends to the Company from direct or
indirect wholly owned subsidiaries);
(3) Incur indebtedness for borrowed money, or
extend guarantees of indebtedness for
borrowed money, that would cause the
consolidated indebtedness of the Company and
its subsidiaries to exceed the sum of amounts
that would be permitted under the A/R
Facility and the then-outstanding principal
amount of the Notes, or repay any outstanding
indebtedness of the Company or any of its
subsidiaries other
- 16 -
than in accordance with the terms thereof;
(4) Engage in any transaction between the Company
or any subsidiary, on the one hand, and any
affiliate of the Company or any subsidiary
(other than the Company or any other wholly
owned subsidiary), on the other hand, other
than compensation of directors, officers and
employees that has been approved by the Board
of Directors (in the case of directors and
executive officers) or pursuant to
Board-approved plans (in the case of other
employees);
(5) Engage in any merger, consolidation or
reorganization of the Company or any
subsidiary (other than any such transaction
involving solely an internal reorganization)
or any other transaction involving the sale,
transfer or other disposition of all or any
substantial portion of the assets of the
Company or any of its subsidiaries;
(6) Sell, lease, transfer or otherwise dispose or
transfer assets of the Company or any
subsidiary, in one or a series of related
transactions, having a value in excess of
US$1 million individually or US$5 million in
the aggregate in any fiscal year;
(7) Grant a security interest in any assets of
the Company or any of its subsidiaries,
including any pledge, except for Permitted
Liens;
(8) Acquire assets, in one or a series of related
transactions, having a value in excess of
US$2 million;
(9) Replace the Company's chief executive officer
with one or more persons not reasonably
acceptable to the Noteholders;
(10) Change or amend the Company's Memorandum of
Incorporation or Bye-Laws in a manner that
adversely affects the rights of Note holders;
(11) Change the size of the Company's board of
directors (other than as contemplated above
under "Increase in Number of Directors and
Amendments to Bye-Laws");
(12) Make any capital expenditures exceeding US$2
million individually or in excess of US$6
million in any fiscal year; or
(13) Engage in other actions customarily
restricted in a
- 17 -
transaction of this nature.
EVENTS OF DEFAULT: An Event of Default will occur if:
(1) The Company fails to pay an installment of
interest within 3 days of the date on which
the same becomes due and payable;
(2) The Company fails to pay principal when due;
(3) The Company fails to comply with any material
term, covenant or agreement contained in the
Investment Agreement, the Notes or related
documents and such failure remains uncured
for 60 days after written notice thereof;
(4) The Company becomes subject to any
bankruptcy, insolvency, liquidation or
similar proceeding; or
(5) Any guarantee or collateral ceases to be
valid or perfected.
PREPAYMENT: The Notes will be prepayable at the option of the
Company at any time following the ninth
anniversary of the closing date; provided,
however, that (i) the Company must provide written
notice to the Noteholders no later than 20 days
prior to exercising a prepayment right and (ii) in
the event of a change of control prior to or in
connection with such prepayment, the prepayment
price will be the greater of the price set forth
above and the COC Put Price that would be payable
if the holders exercised the Change of Control Put
described above on the date of prepayment. Giving
of a notice of prepayment will not terminate the
right of Noteholders to convert such Notes, at any
time prior to the effectiveness of such
prepayment, into Ordinary Shares.
CLOSING CONDITIONS: The transaction is subject to the following
closing conditions:
(1) Satisfactory completion of due diligence on
the Company and its subsidiaries (including
business, legal, financial, accounting and
tax) of a nature and scope satisfactory to
the Investors in their sole discretion, and
the Investors' satisfaction with the current
business plan of the Company (in the form
delivered to the Investors on January 27,
2004), including the Company's progress with
respect to the business plan, and the absence
of any substantial expenditure or commitment
of cash that is not contemplated by such
business plan;
- 18 -
(2) A mutually satisfactory set of definitive
agreements setting forth the terms contained
in this Term Sheet and containing customary
representations, warranties, indemnities,
covenants, opinions and conditions;
(3) Amendment of the Bye-Laws of the Company as
described herein, including receipt of all
approvals of shareholders required to so
amend the Bye-Laws;
(4) Receipt of all necessary corporate approvals
(including due authorization of the issuance
of the Notes);
(5) Receipt of any necessary third party and
governmental consents, waivers and approvals;
(6) No material adverse change in the Company's
assets, liabilities, business, condition
(financial or otherwise), results of
operations or prospects, or that in any other
manner would be expected to adversely affect
the interests of the Investors, from January
27, 2004;
(7) Execution and delivery by the Company and
each of the officers of the Company named on
Annex D hereto of employment agreements in
form and substance that are satisfactory to
the Investors;
(8) Receipt by the Board of Directors of the
Company and its Financing Committee of a
satisfactory fairness opinion from an
independent financial advisor;
(9) Other customary closing conditions for a
transaction of this nature, including receipt
of satisfactory legal opinions from Company
counsel and satisfaction by the Investors
with the guarantee and security provisions of
the investment.
AMENDMENTS: Amendments to the Investment Agreement will
require the written consent of:
(1) in the event of amendments occurring prior to
the closing, Investors representing a
majority in principal amount of the Notes to
be purchased pursuant to the Investment
Agreement;
(2) in the event of amendments occurring
following the closing and prior to the
Conversion Date, Noteholders representing a
majority in principal amount of the Notes
then outstanding; and
- 19 -
(3) in the event of amendments occurring
following the Conversion Date:
(a) to the extent the proposed amendment(s)
adversely affect(s) the right of holders
of Notes, Noteholders representing a
majority in principal amount of the
Notes outstanding; and
(b) to the extent the proposed amendment(s)
adversely affect(s) the rights of
holders of Ordinary Shares, Qualified
Shareholders representing a majority of
the Ordinary Shares acquired upon
conversion of the Notes.
Amendments to the Notes and related documents will
require the written consent of holders of a
majority, in principal amount of the outstanding
Notes, except with respect to:
(1) the timing, form or amount of principal or
interest payments, which shall require the
consent of each affected Noteholder; and
(2) any provision where applicable law otherwise
requires, which shall require such legally
required consent.
COOPERATION AND EXCLUSIVITY: Unless terminated earlier by written agreement of
the Investors and the Company, the Company will,
and will cause its officers, directors, agents,
representatives and advisors to, negotiate
exclusively with the Investors with respect to a
financing transaction or investment in the Company
for the earlier of 90 days from the signing of
this Term Sheet or upon written notification to
the Company by the Investors of the Investors'
decision to no longer proceed with the investment.
Notwithstanding the immediately preceding
paragraph, if the Company receives an unsolicited
bona fide offer or proposal with respect to a
potential or proposed transaction involving the
Company from another entity or group (a "Potential
Competing Investor") that the Financing Committee
of the Company's Board of Directors reasonably
determines, after consultation with its
independent financial advisor and legal counsel,
is more favorable to the Company and to the
holders of Ordinary Shares than the transactions
contemplated by this Term Sheet (a "Superior
Proposal"), the Company may engage in discussions
and negotiations with such Potential Competing
Investor, provided, however, that if the Company
intends to do so (a "termination of
- 20 -
exclusivity") pursuant to this paragraph:
(i) the Company shall deliver to the Investors,
no less than two business days prior to
termination of exclusivity, written notice of
the Company's receipt of a Superior Proposal,
of the material terms and conditions of the
Superior Proposal and of the Company's intent
to terminate exclusivity with the Investors
(the "Non-Exclusivity Notice") (it being
understood and agreed that the Company shall
deliver to the Investors a copy of each and
every unsolicited bona fide offer or proposal
received by the Company with respect to a
potential or proposed transaction involving
the Company from a Potential Competing
Investor, regardless of whether the Financing
Committee considers such proposal to be
superior and regardless of whether, upon
receipt of such proposal, the Company or the
Financing Committee intend to exercise any
rights under this paragraph);
(ii) Termination of exclusivity pursuant to this
section shall not be deemed to terminate or
affect any other provision of this Term
Sheet;
(iii)The Company shall, within twenty-four hours
of any material changes or modifications in
the material terms of any such Superior
Proposal, notify the Investors in writing of
such changes or modifications;
(iv) The Company shall deliver to the Investors
three days' written notice prior to entering
into any oral or written agreement pursuant
to which the Company incurs any liability or
obligation to a Potential Competing Investor;
and
(v) The Company shall provide to the Investors a
copy of any and all confidential information
provided to such Potential Competing
Investor, at the time that such information
is provided to such Potential Competing
Investor.
The Investors and their representatives will have
full access to the Company's senior management
team, books, operations, records and other
materials so that the Investors can complete due
diligence review.
ADVISORY FEES: None.
FINANCING FEES: None.
- 21 -
TRANSACTION FEE: None.
OUT-OF-POCKET EXPENSES: Whether or not the transaction contemplated by
this Term Sheet is consummated, the Company will
reimburse each Investor within five business days
of the Investor's request for all of such
Investor's reasonable out-of-pocket expenses and
fees, including the fees and expenses of
attorneys, accountants and consultants employed in
connection with the Investors' consideration,
negotiation and consummation of the investment,
including the Investor's due diligence on the
Company and any documentation relating to the
transactions contemplated by this Term Sheet.
Notwithstanding the foregoing, if the transaction
contemplated by this Term Sheet is not
consummated, the Company shall not be required to
pay more than an aggregate of US$1 million in
respect of the foregoing obligation.
The liability of the Company hereunder shall not
extend to or include any liability or sum which
would, but for this proviso, cause such liability
to be unlawful or prohibited by section 39 of the
Bermuda Companies Act 1981.
INDEMNITY: By the Company of the Investors from any legal
actions arising in connection with the Investment
or the pursuit of an investment or otherwise in
connection with this Term Sheet, or in connection
with the breach of any representation of the
Company as set forth above or in the documentation
to be entered into pursuant to this Term Sheet;
provided, however, that:
(1) the liability of the Company hereunder shall
not extend to or include any liability or sum
which would, but for this proviso, cause such
liability to be unlawful or prohibited by
section 39 of the Bermuda Companies Act 1981;
and
(2) The Company shall be permitted to defer
payment of any indemnification amount, other
than indemnity-related fees and expenses
(which shall be reimbursed by the Company on
a current basis as provided below), until the
earlier of (i) the expiration of the twelve
(12)-month period following the closing date
of the transactions contemplated by this Term
Sheet (or if the transactions contemplated by
this Term Sheet do not close within three
months of the date hereof, the expiration of
the eighteen (18)-month period following the
date hereof) and (ii) the date on which the
Company becomes subject to any bankruptcy,
insolvency, liquidation or similar
- 22 -
proceeding. Interest will accrue on all
payment amounts deferred pursuant to this
clause (2) at a rate of 10% per annum, which
amount shall be payable along with the
indemnification amount upon termination of
the deferral period.
Notwithstanding anything to the contrary herein,
to the extent permitted under clause (1) above,
the Company shall reimburse an Investor for all
indemnity-related fees and expenses (including but
not limited to legal fees) within five business
days of such Investor's request for reimbursement.
CONFIDENTIALITY: From and after the date hereof, without the prior
written consent of the other parties, the
Investors, the Company and their respective
representatives agree not to disclose the
existence of this Term Sheet or its contents to
any other parties, nor to make any written or
other public disclosures regarding this
transaction, other than as required by law. Except
as required by law, the Investors, the Company and
their representatives will keep confidential any
discussions between the Company and the Investors.
BINDING EFFECT AND By executing this Term Sheet, the parties express
LIABILITY: their mutual interest in pursuing an investment
substantially along the lines described herein,
and, solely with respect to the provisions
described in the following sentence, make certain
commitments to each other. The parties understand
and acknowledge that, except for the obligations
of the Investors and the Company in the sections
entitled "Cooperation and Exclusivity,"
"Out-of-Pocket Expenses," "Indemnity,"
"Confidentiality," "Binding Effect and Liability,"
"Governing Law" and "Waiver and Release of Certain
Claims," all of which are intended to be legally
binding once the parties have executed this Term
Sheet, this Term Sheet is not a legally binding
agreement and that the failure to execute and
deliver a definitive agreement will impose no
liability on any of the Investors or the Company.
GOVERNING LAW: This Term Sheet, the Investment Agreement and the
Notes will be governed by New York law, with
exclusive jurisdiction for all disputes concerning
this Term Sheet to be in the federal or state
courts in the State of New York. The parties
consent to the jurisdiction of the federal and
state courts located in the State of New York.
- 23 -
WAIVER AND RELEASE OF Each of the Company and each of the Investors
CERTAIN CLAIMS affirmatively waives and releases any and all
claims, known or unknown at the time of execution
of this Term Sheet, against each other party to
this Term Sheet that relate in any way to the
negotiation, execution or delivery of this Term
Sheet or the consummation of any transaction
contemplated hereby.
- 24 -
Accepted and agreed as of February, __ 2004, Accepted and agreed as of February, __ 2004,
on behalf of: on behalf of:
MORGAN STANLEY & CO. INCORPORATED CFSC WAYLAND ADVISERS, INC.
By: ____________________________ By: ____________________________
Name: Name:
Title: Title:
Accepted and agreed as of February, __ 2004, Accepted and agreed as of February, __ 2004,
on behalf of: on behalf of:
AHAB CAPITAL MANAGEMENT, INC. VARDE PARTNERS, INC.
By: ____________________________
By: ____________________________ Name:
Name: Title:
Title:
Accepted and agreed as of February, __ 2004,
on behalf of:
VIATEL HOLDING (BERMUDA) LIMITED
By: __________________________
Name:
Title:
[Signature Page to Term Sheet]
ANNEX A
CONVERSION PRICE
TOTAL EQUITY VALUE TRANCHE C.P. CONVERSION PRICE
- ------------------ ------------ ----------------
100,000,000 0.75 0.75
150,000,000 1.45 0.87
200,000,000 2.14 1.10
250,000,000 2.84 1.38
300,000,000 3.54 1.68
350,000,000 4.24 2.00
400,000,000 4.43 2.29
450,000,000 4.63 2.54
500,000,000 4.82 2.76
550,000,000 5.02 2.96
600,000,000 5.22 3.14
650,000,000 5.41 3.30
700,000,000 5.61 3.46
750,000,000 5.80 3.61
800,000,000 6.00 3.75
"Total Equity Value" means the total equity value (to be defined in the final
documentation) of the Company on a given date.
"Tranche" means a category of Total Equity Value. The Investment Agreement will
include Tranches in increments of US$1,000,000 and corresponding Tranche C.P.s.
"Tranche C.P." means the conversion price to be applied to the corresponding
category of Total EquityValue.
"Conversion Price" means the weighted average conversion price. The Conversion
Price shall be the result of a fraction, (A) the numerator of which is the
"SumProduct" of each Tranche times the Tranche C.P. of such Tranche, up to and
including the Tranche that includes the Total Equity Value, divided by (B) the
Total Equity Value. The "SumProduct" means the sum of each of such products. An
example of the formula follows:
SumProduct (1) (Tranches; Conversion Price)
-------------------------------------------
Total Equity Value
(1) Sum Product = Multiply each Tranche by its respective Tranche C.P. and add
the totals.
A-1
ANNEX B
GUIDELINES FOR VALUATION IN CONVERSION PRICE CALCULATION
At any time that a Conversion Price must be determined, the Total Equity
Value shall be determined as follows:
The Board of Directors shall make a reasonable, good-faith determination of
the Total Equity Value and shall submit such determination (the "Board
Determination") for the approval of the Majority Noteholders.
If the Majority Noteholders do not approve the Board Determination, then
the Board of Directors, on the one hand, and the Majority Noteholders, on
the other hand, shall promptly commence good-faith negotiations to arrive
at a joint determination of the Total Equity Value.
If the Board of Directors and the Majority Noteholders do not arrive at a
joint determination of the Total Equity Value within ten days of delivery
by the Board of Directors to the Noteholders or by the Noteholders to the
Board of Directors, as applicable, of written notice of the occurrence of
an event giving rise to conversion or exchange, then no later than the
fifteenth day after delivery of the written notice referenced in this
clause (c), the Board of Directors and the Majority Noteholders shall refer
the matter to an independent valuation expert to be selected by mutual
consent of the Board of Directors and the Majority Noteholders. The
determination of such independent valuation expert shall be final and
binding on all parties.
If the circumstance giving rise to a right of conversion by Noteholders or
exchange by the Company is a Liquidity Event of the nature set forth in
clause (5) of the definition of "Liquidity Events," the Total Equity Value
shall be determined with reference to the public offer price for the
Ordinary Shares, unless the public offer price does not reasonably reflect
the equity value of the Company.
If a Trading Market exists, the Total Equity Value shall be determined with
reference to the market value of the Ordinary Shares on the Trading Market,
unless such market value does not reasonably reflect the equity value of
the Company.
Noteholders' affiliates who are members of the Board of Directors shall
abstain from all Board deliberations and voting with respect to the Board's
determination or negotiation of Total Equity Value.
B-1
ANNEX C
FORM OF AMENDED BYE-LAWS
C-1
ANNEX D
COMPANY OFFICERS SIGNING EMPLOYMENT AGREEMENTS
Lucy Woods
Exhibit 99.2
[VIATEL LOGO]
Viatel announce proposed $60m funding
Re-launch gathers pace as new brand, advertising campaign and services
are rolled out
Viatel, the pan-European communications company, has signed a term sheet with
four investors including Morgan Stanley & Co. Incorporated to raise up to $60m.
Although the term sheet is non-binding, negotiations are now underway with
Morgan Stanley, Ahab Capital Management, Inc., CFSC Wayland Advisers, Inc. and
Varde Partners, Inc. to finalise the details of the proposed financing. It is
anticipated that the transaction will be finalised in the second quarter of
2004.
The investment would take the form of senior secured convertible debt securities
with 8% interest, payable in cash or in kind, and maturing in 2014. The
conversion price is proposed to be contingent on the value of Viatel upon the
occurrence of various specified liquidity events.
This announcement represents a significant step forward in the rebuilding of
Viatel. Once closed, the deal will leave the company fully funded to deliver on
its business plan. Viatel, a provider of communication services and operator of
a pan-European network, is reengineering itself to serve mid sized firms in
Europe*, a market estimated to grow by 21% to Pound Sterling 23.5 billion by
June 2005.**. Viatel will continue to serve carriers and internet service
providers with wholesale services.
Lucy Woods, CEO of Viatel and a leading figure in the European telecoms industry
said, "The term sheet signed today is a substantial vote of confidence in our
business plan, our people and the opportunity we have before us."
"It will strengthen our ability to deliver a fresh approach to European
businesses, providing them with the responsive data and internet services they
deserve."
Michael Petrick, Managing Director at Morgan Stanley said, "This financing
demonstrates our faith in Viatel and its management team and enables the company
to pursue the significant opportunities that exist in the European Telecom
market."
The announcement coincides with the launch of Viatel's new brand, and a
marketing campaign designed to demonstrate Viatel's resolve to serve the
untapped potential of the European mid sized business market. This campaign is
deliberately fresh and bold, with a sense of humour that
articulates Viatel's difference in the overcrowded and under served European
business marketplace.
Leslie Goodman, Chairman of Viatel said, "We have worked very hard over the past
year to restructure Viatel to meet the changed needs of today's market; this
announcement is a demonstration of the progress we've made."
Viatel operates across six European markets, including the UK, France and
Germany. It has more than 10,000 business customers, serving them with a full
suite of communications services including broadband, Virtual Private Networks,
Managed Firewall, Managed Hosting and Co-location.
* Companies between 100 and 1,000 employees
** Analysys - European Fixed Telecoms - June 2003
ABOUT VIATEL
Viatel is a pan-European data and internet services company delivering services
in communications to European businesses, regardless of size.
Operating across the UK, France, Germany, Belgium, The Netherlands and
Switzerland, Viatel is a communications service provider operating a
pan-European network. Headed by Lucy Woods, formerly of WorldCom EMEA and BT,
the company employs 180 people throughout Western Europe to provide services
including IP-VPNs, managed hosting and managed connectivity.
For further information on Viatel, please visit www.viatel.com
FOR FURTHER INFORMATION PLEASE CALL:
Chris Jones, Neil Daugherty and James Ralph on +44 (0)207 7340 0430
Forward Looking Statements
This document contains "forward-looking statements" as the term is defined in
Section 21E of the Securities Exchange Act of 1934, as amended, including
statements concerning plans and objectives for future operations, events or
performance and underlying assumptions and other statements which are other than
statements of historical fact. Any such forward-looking statements are not
guarantees of future performance. Various known or unknown factors could in the
future cause actual outcomes to differ materially from those anticipated in any
such forward-looking statements. Such factors include, among other things, our
ability to conclude final terms as to any financing, our ability to maintain a
viable cash and balance sheet position, our ability to maintain, operate and
develop our network, and other unforeseen financial, legal, operational or
technical issues. Any such forward-looking statements speak only as of the date
they are made. We undertake no obligation to update any such forward-looking
statement in light of new information or future events.
NO ASSURANCES CAN BE GIVEN THAT THIS OR ANY OTHER FINANCING TRANSACTION WILL BE
CONSUMMATED.
A FULL COPY OF THE TERM SHEET HAS BEEN FILED ON FORM 6-K WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION.