IP Communications Secures $312 Million in Second-Round Financing; Original Investors Join Other Leading Firms to Back Fast-Growing Broadband Service Provider

Business Wire, Nov 14, 2000

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DALLAS--(BUSINESS WIRE)--Nov. 14, 2000

IP Communications (www.ip.net), a leading independent broadband service provider and the largest in Texas, today announced it has secured $312 million to complete its second round of financing. The company raised $87 million in the first round in 1999.

Significantly, the three first-round equity firms were also major investors in the second-round, citing continued confidence in IP Communications' strategy, capabilities and management team. VantagePoint Venture Partners, the lead investor, as well CIBC Capital Partners and GE Equity each reinvested more than 100 percent of their initial amount.

Joining the original investors were DLJ Global Communications Partners, Desai Capital Management, Inc., Creative Technology Ltd. (Nasdaq:CREAF), Prudential Capital Group--Direct Private Equity, and Bruckmann, Rosser, Sherrill & Company, as well as several other private firms. Together, IP Communications' original and new investors provided $130 million in equity financing. An additional $182 million was secured in long-term debt.

"Broadband, or high-speed networking, is one of the most exciting sectors in the technology revolution, and IP Communications clearly is emerging as one of the sector's brightest stars," said Andy Rush, head of DLJ Global Communications Partners, the telecommunications investment arm of DLJ Merchant Banking Partners, an affiliate of CSFB Private Equity. "We're impressed with the ability of this seasoned management team to deploy a state-of-the art high-speed network on a scale and at a pace that out-strips the competition."

By late-2001, IP Communications will have completed construction of its network, with central office facilities in 1,280 locations across 10 states served by SBC, with access to one-in-three phone lines in the United States. In addition to Texas, IP Communications will provide its broadband services to business and residence customers in California, Illinois, Ohio, Michigan, Missouri, Indiana, Wisconsin, Kansas and Oklahoma.

"We are extremely pleased with the world-class caliber of our investors, and especially with the large vote of confidence from our original investors," said Dal Berry, IP Communications Chairman and CEO. "Importantly, we have been able to secure a significant level of investment from some of the most highly-respected companies in the world at a time when the equity market is still wobbly from the spring crash. That clearly is a testament to the commitment and talent of our employees."

Sean Minter, IP Communications President, said the new financing would allow IP Communications to accelerate strategic deployment of its network and develop a comprehensive suite of broadband products and applications for small and medium-size businesses, as well as residential customers.

"We are the only independent facilities-based broadband service provider reaching large, medium and small markets served by SBC," Minter said. "We will be able to meet the dynamic needs of customers for both voice and data services with the most sophisticated digital technology available. To support the increase in customers, lines and products offered, we continue to invest heavily in our back-office capabilities, both in information systems and through a significant expansion of our provisioning and customer care workforce."

At completion, IP Communications' fully redundant backbone network of ATM switching equipment, supplied by Lucent Technologies, will be among the largest in the country, Minter said. Lucent maintains and monitors IP Communications network from its global network operations center in Denver, Colorado.

About IP Communications

Founded in 1999, IP Communications is a fast-growing independent broadband service provider. IP currently serves Texas and is launching service in nine other states served by SBC: California, Illinois, Ohio, Michigan, Missouri, Indiana, Oklahoma, Kansas, and Wisconsin. IP Communications offers business-class high-speed, "always on" local, metropolitan and wide-area connectivity as a seamless, cost-effective replacement for traditional T-1, frame relay and ISDN lines. IP Communications' next-generation packet-switched network, using an Asynchronous Transfer Mode (ATM) backbone and advanced switching capabilities, enables the company to offer its business customers extensive Quality of Service and Class of Service capabilities. The company's primary suppliers include Lucent Technologies (NYSE:LU), Digicom. Efficient Networks (Nasdaq:EFNT) and Network Appliance (Nasdaq:NTAP). IP Communications' Web site is www.ip.net.

About Bruckmann, Rosser, Sherrill & Co., LLC

Bruckmann, Rosser, Sherrill & Co., LLC (BRS) is a private equity investment firm that manages approximately $1.2 billion of committed capital. The firm is currently investing its second fund, Bruckmann, Rosser, Sherrill & Co. II LP, which has $770 million of committed capital. BRS specializes in management buyouts and recapitalizations of high quality, middle market companies. In addition, BRS makes venture capital investments in selected industries including telecommunications and health care. As a strategic equity partner, BRS works closely with business owners and management teams to grow and develop its portfolio companies in order to create significant equity value.