LEVEL 3 COMMUNICATIONS AND XCOM TECHNOLOGIES SIGN DEFINITIVE MERGER AGREEMENT
OMAHA, NE, April 6, 1998 – Level 3 Communications, Inc. (Nasdaq: LVLT) and XCOM Technologies, Inc., a competitive local exchange carrier (CLEC) and communications software developer headquartered in Cambridge, Massachusetts, today announced that the two companies have executed a definitive agreement and plan of merger. Under the terms of the agreement, which is a stock for stock transaction at a fixed exchange rate with no collars, approximately 2.6 million shares of Level 3 common stock will be exchanged for all of the common stock of XCOM at the time of closing.
At Level 3's closing price on Friday ($62.50), the merger consideration for XCOM is approximately $165 million, exclusive of warrants and options. The merger is expected to close during the second quarter of 1998. Consummation of the merger is subject to the satisfaction of certain conditions, including the expiration or termination of any applicable waiting periods under the Hart-Scott-Rodino Act and the absence of certain material adverse changes. The closing of the merger is expected to occur as soon as practicable after satisfaction of these conditions.
"This is an exciting and important merger for both companies," said James Q. Crowe, president and CEO of
Level 3. XCOM has created and developed a new and important technology. XCOM holds exclusive proprietary rights to technology which provides key components of the 'gateway' or 'bridge' necessary to fully interconnect the 100-year-old public switched telephone network (PSTN) to new networks based on the Internet Protocol (IP) – such as that being built by Level 3. "This bridge will allow Level 3 to offer a broad range of communications services, including voice and fax services, to customers at lower cost and, over time, with new features and enhancements," said Crowe. "Moreover, customers will be able to enjoy these benefits using their existing telephone equipment and without changing dialing patterns or adding additional devices." "We are particularly looking forward to working with XCOM's entrepreneurial management team. We have tremendous regard for their talent and have discovered that we think alike. They will play a major role in the combined company," said Crowe.
"We are tremendously excited by the prospect of joining forces with Level 3," said David F. Callan, XCOM president & CEO. "They know what we have accomplished and what we can accomplish together. Level 3's capital resources, along with the depth and experience of their management team are exactly what we need to expand our business to the national level." "Both companies are aggressively embracing and helping to shape the new world of IP-based technology and communications. Our cultures and views are virtually the same. Both companies' executives come from entrepreneurial backgrounds with successful track records in starting up and growing companies to very substantial size and success in their markets," said Callan. "I see a great match between Level 3 and XCOM. This combination of technology, resources and management positions us to be an industry leader."
XCOM Operating Network Gives Level 3 A Jump-Start In Northeast Corridor
In addition to contributing important telephone network-to-IP network bridge technology, XCOM brings a fast growing competitive local exchange business to the combined companies. XCOM now has 10,000 local access lines and provides services in Boston and Eastern Massachusetts. The company has regulatory co-carrier authorizations from five states, with six others pending. "What XCOM has accomplished as a competitive local exchange carrier is remarkable. Starting in the most competitive market in the country – the local telecommunications market in the Northeast corridor of the U.S. – they have not only been successful, but became profitable after five months with current monthly revenue of $3.2 million. The combined companies will bring the same successful formula from Boston to New York, New Jersey, Maryland, Virginia, the District of Columbia, New Hampshire and Rhode Island over the course of the year," said Crowe. "This existing service base gives us an operating environment to evaluate, analyze and test the telephone network-to-IP network bridge technology. It also enables Level 3 to serve customers in the most dense – and potentially lucrative – market in the country, as we continue to build our own networks to replace leased infrastructure," said Crowe.
About XCOM Technologies, Inc.
XCOM, "the data phone company," is a competitive local exchange carrier (CLEC) and communications software development company providing local data and voice services. Founded in 1996, XCOM offers virtual points of presence (POP) to Internet service providers and remote access solutions to corporate customers on a regional basis.
About Level 3 Communications
Level 3 Communications, Inc. (NASDAQ: LVLT), an international communications company, operates one of the largest Internet backbones in the world, connecting 180 markets in 18 countries. The company serves a broad range of wholesale, enterprise and content customers with a comprehensive suite of services including: Internet Protocol (IP) services, broadband transport and infrastructure services, colocation services, voice and voice over IP services, content delivery and media distribution services. These services provide the building blocks to enable Level 3’s customers to meet their growing demands for advanced communications solutions. The company’s Web address is www.Level3.com.
"Level 3 Communications,” "Level 3," the red 3D brackets and the Level 3 Communications logo are registered service marks of Level 3 Communications, LLC in the United States and/or other countries. Level 3 services are provided by wholly owned subsidiaries of Level 3 Communications, Inc. Any other service, product or company names recited herein may be trademarks or service marks of their respective owners.
Forward-Looking Statement
Some of the statements that we make in this press release are forward looking in nature. These statements are based on management’s current expectations or beliefs. These forward looking statements are not a guarantee of performance and are subject to a number of uncertainties and other factors, many of which are outside our control, which could cause actual events to differ materially from those expressed or implied by the statements. The most important factors that could prevent us from achieving our stated goals include, but are not limited to our ability to: successfully integrate acquisitions; increase the volume of traffic on our network; defend our intellectual property and proprietary rights; develop new products and services that meet customer demands and generate acceptable margins; successfully complete commercial testing of new technology and information systems to support new products and services; attract and retain qualified management and other personnel; and meet all of the terms and conditions of our debt obligations. Additional information concerning these and other important factors can be found within Level 3’s filings with the Securities and Exchange Commission. Statements in this press release should be evaluated in light of these important factors. Level 3 is under no obligation to, and expressly disclaims any such obligation to, update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise.
