FLAG Telecom and Global TeleSystems (GTS) announced that they have reached an agreement whereby GTS will sell to FLAG its interest in FLAG Atlantic, the 50/50 joint venture that is building the FLAG Atlantic-1 system, while retaining ownership over certain infrastructure including a trans-Atlantic fibre pair.
The total value of the transaction to GTS is $175 million. Under the terms of the agreement, GTS will receive $135 million in cash from FLAG Telecom. In addition, GTS will receive additional duct and dark fibre assets in France and will retain the right to acquire backhaul fibres from FLAG Atlantic on favorable terms going forward.
The transaction will have no impact on either the project's scheduled first quarter 2001 Ready For Service (RFS) date or on the project's budget, according to the company press release, which further stated that funding arrangements for the project, including all pre-sale proceeds of $800 million, are likewise unaffected.
FLAG Telecom will fund the cash consideration for the transaction out of its own cash resources. On completion of the transaction, FLAG Atlantic Limited will become a wholly owned subsidiary of FLAG Telecom Holdings Limited. Completion is expected to take place before the end of the year 2000.
FLAG Atlantic -1 is the world's first multi terabit trans-Atlantic cable system, which will offer direct connectivity between New York, London and Paris, with seamless connections to numerous other cities in the US, Europe and other countries in the Middle East and Asia Pacific. FLAG Atlantic-1 continues on schedule with the UK, French and New York (North) landing stations completed, all shore-end cables landed and marine installation underway. — (Albawaba-MEBG)
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