Global Crossing will sell its small business group (SBG) to Matrix Telecom, a Platinum Equity company, for $40.5 million in gross cash proceeds. SBG is a provider of voice and data products to an estimated 30,000 small- to medium-sized business enterprises in the U.S., which have remained customers of SBG for an average of more than seven years. SBG’s current product offering includes switched and dedicated voice services and data applications. In addition, Global Crossing and Matrix have entered into a long-term carrier services agreement under which Global Crossing will offer its full suite of voice, data and IP services to Matrix. The sale is subject to regulatory approval and is expected to close during the third quarter of 2005.
Matrix Telecom is one of 21 operating companies in the portfolio of Platinum Equity, a global acquisition firm based in Los Angeles and headed by CEO Tom Gores.
Global Crossing expects approximately $35 million in net cash proceeds from the transaction after giving effect to estimated purchase price adjustments, the payment of certain fees and the deduction of certain retained liabilities.
In addition to the purchase agreement, Global Crossing and Matrix Telecom, a telecommunications provider to the small- and medium-sized enterprise market, have entered into a long-term carrier services agreement, under which Global Crossing will provide to Matrix wholesale voice, data and IP services. Revenues under this carrier services agreement are in addition to the cash proceeds mentioned above.
“Since our primary focus is providing converged communications services to global enterprises and carriers, the sale of SBG allows us to concentrate on our core business,” said John Legere, Global Crossing’s CEO.
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