Marconi deal raises Atlantic's value by 70%
Saturday 13 November 1999
Shares in Atlantic Telecom, which has just 40,000 customers and revenues of pounds 20m a year, rose by 332p to 815p, valuing the company at pounds 690m. Twelve months ago it was worth less than pounds 90m.
The deal will transform Atlantic Telecom from a "local loop" operator largely confined to Scotland into a national player with a long-distance broadband fibre network connecting 40 of the biggest cities in England and Scotland. Marconi, formerly known as GEC, is to pay Atlantic Telecom pounds 50m in cash for 39 million shares worth pounds 172m and provide Atlantic with pounds 50m of finance to buy Marconi software and switching equipment. In addition it is granting Atlantic a 20 year licence to use its fibre optic network, built originally by GEC along canal towpaths.
The network, which stretches from London and up through the Midlands to Glasgow and Edinburgh in a figure of eight, matches the towns where Atlantic is already operating or has licences to start a service. It is currently operating in Glasgow, Edinburgh, Dundee and Edinburgh but has licences to launch services in half a dozen English cities, including Manchester.
Alongside the strategic partnership with Marconi, Atlantic also announced a pounds 94m share placing at 440p a share. The proceeds, together with the pounds 100m of support from Marconi, will be used to build out Atlantic Telecom's local network in Manchester, install a city centre fibre optic network in five cities and grow its high-speed data and broadband services such as Internet and e-commerce applications.
Graham Duncan, executive chairman of Atlantic Telecom, said that although Marconi would receive shares worth pounds 172m at the offer price for a cash outlay of just pounds 50m, the benefits of the deal, including access to Marconi's fibre optic network, were worth pounds 222m.
Mr Duncan also said that with Marconi behind it, Atlantic would find it much easier to tap the debt and bond markets when it needed further funding for its network roll-out. Building out the six networks in England it has licences for is likely to cost around pounds 300m.
Under the agreement, Marconi is prevented from buying more shares or selling its stake until December 2003. It also gives Marconi the right to a seat on the board, although it has not yet nominated a candidate.
- 3 Woman opens professional cuddling shop – gets 10,000 customers in first week
- 4 Grayson Perry: London needs affordable housing because 'rich people don't create culture'
- 5 Kenya bus attack: Al-Shabaab militants kill 28 non-Muslims who failed to recite Koran
Ryan Gosling granted temporary restraining order against a woman 'convinced she was his twin flame'
Jennifer Lawrence sings in new The Hunger Games: Mockingjay Pt 1 clip on YouTube
Anti-gay hate preacher accidentally tweets 4,000 followers cartoon clip of him 'confessing' to be a 'homosexual sodomite'
Woman opens professional cuddling shop – gets 10,000 customers in first week
Grayson Perry: London needs affordable housing because 'rich people don't create culture'
Rochester by-election: Ukip gains second MP as Tory defector Mark Reckless holds seat
'Beast of Bolsover' Dennis Skinner takes Ukip MP Mark Reckless to task moments after he is sworn in
Rochester by-election: Labour MP Emily Thornberry resigns after posting white van and England flags tweet
France 'blocks' Russian sailors from boarding a warship
Revealed: How the world gets rich – from privatising British public services
Myleene Klass: Ed Miliband 'strikes back' by comparing UK's need for Labour's mansion tax to Hear'Say track
iJobs Money & Business
Voluntary Only - Expenses Reimbursed: Reach Volunteering: Age Concern Slough a...
Voluntary Only - Expenses Reimbursed: Reach Volunteering: Crossroads Care is s...
£20000 - £25000 per annum + OTE £35,000: SThree: We consistently strive to be ...
£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...