Successful IPBC Loan a Milestone In PCCW/Telstra Alliance

Business Wire, Nov 15, 2000

Business Editors and High Tech Writers

HONG KONG--(BUSINESS WIRE)--Nov. 15, 2000

Pacific Century CyberWorks Limited (PCCW) and Telstra Corporation Limited jointly announced today the execution of one of the key components in their proposed alliance with the successful raising of a US$2 billion loan by the Internet Protocol Backbone Company (IPBC).

The fully underwritten, syndicated loan will be led by Chase Manhattan Bank and Barclays Bank and is part of the terms for the PCCW/Telstra pan-Asian alliance announced on October 13.

The borrowing generated strong interest in the international banking community and the underwriters expect to include a further group of major banks at the co-lead level. Invitations to selected banks are expected to be issued shortly.

Telstra's Group Managing Director, Finance and Administration, Paul Rizzo, said the positive response from banks reflected the market's confidence in the potential of the IPBC.

"This is not a start-up venture but an alliance between two operational companies with strong international networks," he said.

"From day one it is expected to become the leading carrier of voice and data/Internet traffic in non-Japan Asia, and among the top global wholesale carriers," he said.

Unaudited proforma financial data for the IP Backbone company for the year ended 30 June 2000 were as follows: Revenues US$1,929 million, EBITDA (Earnings before interest, tax, amortization and depreciation) US$493 million, and EBIT (Earnings before interest and tax) US$361 million.

Pacific Century CyberWorks Deputy Chairman Francis Yuen said PCCW and Telstra had undertaken to use the IPBC for a major proportion of their offshore traffic for the first five years and possibly longer.

"The successful raising of this loan," said Mr. Yuen, "is a key step in the development of the PCCW/Telstra alliance, and demonstrates the strong co-operation and working relationship between the two parties."

Mr. Rizzo said that a further indication of the lenders' interest in the IPBC is their commitment to obtaining investment-grade credit rating status as soon as possible.

Under the terms of their alliance, PCCW and Telstra agreed for the IPBC to raise the loan in order to pay PCCW for equalization of the assets it contributed to the joint venture and to return capital to the shareholders. The loan will also create an appropriate gearing level for the IPBC.

The loan will be in three tranches over three, five and seven years. The completion of full syndication is expected during December, with signing targeted soon afterwards.

Drawdown of the facility will not occur until full settlement of all the Telstra/PCCW transactions, including the convertible note and the Regional Wireless Company. This is expected in late January.

Mr. Rizzo said the IPBC loan had been developed in parallel with PCCW's US$4.7 billion borrowing, also announced in Hong Kong today.

"While the two facilities are independent, the co-operation and co-ordination achieved by the two companies was excellent and augurs well for our pan-Asian alliance."

About Pacific Century CyberWorks (PCCW)

Pacific Century CyberWorks is the Hong Kong-listed technology flagship of the Pacific Century Group. PCCW is one of the world's largest Internet companies by market capitalization.

PCCW aims to capture growth opportunities in providing connectivity, applications and content services to businesses and consumers. With the August 2000 PCCW-Cable & Wireless HKT merger, PCCW has developed an innovative business model designed to maximize synergies and growth opportunities across three operating sectors:

1. Telecommunications Services - Includes PCCW-HKT. Principally comprising telecommunications and other value-added services based on the Company's fiber-optic network in Hong Kong.

2. Global Communications Services - Mobility and global connectivity services.

3. Net Enterprises - NOW, B2B business services, Data Center services and CyberWorks Ventures, which takes strategic positions in synergistic core businesses.

Infrastructure Services directly supports all three sectors. To learn more about Pacific Century CyberWorks, go to www.pcg-group.com