Teleglobe Inc. is to sell its core voice and data business to a company controlled by affiliates of Cerberus Capital Management, L.P. and TenX Capital Partners, LLC of New York and Philadelphia, respectively.
Under terms of the agreement, the purchaser will pay $155.3 million cash for the assets, subject to certain adjustments. The agreement is subject to a number of conditions including approvals by the courts in Canada and the US as well as other regulatory approvals. It is expected that the purchaser will assume day-to-day operations of the business under an interim management agreement in mid-November following court approval. Final closing of the transaction is expected early next year.
John Brunette, Teleglobe’s Chief Executive Officer, said, For employees and customers, the transition is expected to be smooth. Serge Fortin, Teleglobe’s Chief Operating Officer, commented, Teleglobe has been operating on a business-as-usual basis since filing for creditor protection on May 15, 2002. Customers will continue to benefit from the world class service they expect from Teleglobe’s professional organization.
Mike Green, General Partner of TenX, commented, We are excited about the Teleglobe business and its potential for growth. The management team as well as the employee and customer base is very strong and was part of the reason we decided to make this investment. Lenard Tessler, Managing Director of Cerberus, said, This is an excellent long-term investment for our group. Teleglobe is consistent with the types of companies in which Cerberus likes to invest.
Both Mr. Green and Mr. Tessler emphasized that Teleglobe’s headquarters and operations centre will remain in Montreal. Mr. Brunette will oversee the transition period. Mr. Fortin will continue to lead the company beyond the transition under the new ownership.
Cerberus Capital Management, L.P. and its affiliated entities manage funds and accounts with capital in excess of US$8 billion. Cerberus’ main office is located in New York City.
TenX Capital Partners, LLC is a private equity firm with investments in a select group of middle-market technology, communications and business services companies.
A sales process was conducted which provided the opportunity to expose the business to the widest possible number of potential acquirers. Fundamental to the process was the recognition that it must be expeditious to preserve the value of the business and protect the interests of Teleglobe’s stakeholders. This culminated in an agreement four months after initiation of the process.