GLOBIX CORPORATION TO MERGE WITH NEON COMMUNICATIONS, INC.
NEW YORK – July 19, 2004
Merger to Create Hosting, Managed Applications and Network Services Company With Over 1,500 Customers, Diversified Revenue Base and Fiber Infrastructure in Major Markets
NEW YORK, July 19, 2004 — Globix Corporation’s (OTCBB:GBXX), a provider of managed applications and hosting services, announced today the execution of a definitive merger agreement with NEON Communications, Inc. (NEON), a privately held provider of optical networking services for customers in the Northeast and mid-Atlantic markets. NEONs revenue for the year ended December 31, 2003 was $41.6 million. Globix revenue for the year ended September 30, 2003 was $60.2 million. As a result of the merger, NEON will become a wholly owned subsidiary of Globix, and holders of NEON common stock and warrants will receive approximately 27.6 million shares of Globix common stock, representing approximately 56.7% of the outstanding shares of common stock of the combined company. The current owners of Globix common stock are expected to continue to hold approximately 81% of the Globix common stock following the merger, due to cross ownership between the two companies.
The transaction is subject to a number of conditions, including approval of the merger by NEON stockholders, the registration of the Globix common stock and preferred stock to be issued in the merger and other regulatory approvals.
Under the merger agreement, holders of NEON common stock, options and warrants will receive 1.2748 shares of Globix common stock for each share of common stock, options or warrants owned by the holder At the closing, the combined companys cash will be used to redeem one third of its preferred stock and accrued dividends at closing and Globix will issue convertible preferred stock for the balance. Assuming a September 30, 2004 closing, NEON preferred stockholders will receive in the aggregate approximately $5.1 million in cash and approximately 1,152,948 shares of a class of Globix preferred stock to be created in the merger, having an aggregate liquidation value of approximately $10.2 million. The new Globix preferred stock will vote together with the common stock and will be convertible into shares of Globix common stock. The Globix preferred stock will accrue dividends at a rate of 12% per annum and will be redeemable only at the option of Globix, and at the option of the holders upon a change in control. The merger is also conditioned upon a debt for equity exchange where, in a private transaction, certain of Globixs senior secured note holders will exchange $12.5 million in principal and accrued interest of its 2008 senior notes for approximately 4,545,455 shares of Globix common stock.
The merger agreement calls for the Board of Globix to include 4 members of the Board of Directors of NEON, 4 members of the current Globix Board and 1 member who currently serves on both the Globix and the NEON Boards.
Following the merger, Globix will continue its business and operations and will incorporate NEONs brand name and operations. The combined company will have offices in New York, Boston, Washington, D.C., Atlanta, Santa Clara, California, and London, as well as network presence in Chicago, Los Angeles, Seattle, Atlanta, New York, Washington DC., London and throughout markets in the telecommunications corridor of the 12 state Northeast and mid-Atlantic regions. Data center locations will be in New York, Atlanta, Santa Clara, California and London as well as remote data center and co-location sites integrated along NEONs fiber network in New York, Baltimore, Philadelphia, northern New Jersey and throughout New England. The combined company expects to maintain its respective network operation centers to insure network and systems performance in conjunction with all service level agreements.
Describing the impact of the merger, Pete Stevenson, President and CEO of Globix stated, The merger creates a win-win for the combined companies investors and customers. Its a merger consistent with our growth plans and provides a significant level of vertical integration for the combined entity. We expect that cost savings achieved by combining operations will help fuel the growth of new transport, IP and value added services.
By combining the talented work forces, systems, products and capital resources of each company we will be in a good position to continue NEONs network development and integrate Globixs IP and infrastructure management services with ours for expansion into additional markets, stated Steve Courter, Chairman and CEO of NEON.
Globix (http://www.globix.com)(OTCBB:GBXX) is a leading provider of application, media and infrastructure management services. Globix provides flexible business solutions which combine skills, support, technology and experience to enable our customers to use the Internet as a way to provide business benefits and sustain a competitive advantage. By managing complex application, media and infrastructure environments, we help our clients protect Internet revenue streams, improve user satisfaction and reduce technology operating costs and risks. Our clients include operating divisions of Fortune 100 companies as well as mid-sized enterprises in a number of vertical markets including media and publishing, technology, financial services, health care and government. Globix and its subsidiaries have operations in New York NY, London UK, Santa Clara CA, Fairfield NJ, Fairfax VA and Atlanta GA.
Where to Find Additional Information about the Transaction
Globix, NEON and their respective directors and officers may be deemed participants in the solicitation of proxies from stockholders of NEON with respect to the transactions contemplated by the merger agreement. A description of any interests that they may have in transaction will be included in the proxy statement/prospectus.
Risk Factors and Forward-Looking Information
Chris Capra / Paul Del Colle