The amazing Mr. Medina: in the four years since Manny Medina began changing his company from a real estate development firm to a global provider of Network Access Points, he's faced a storm of criticism predicting his downfall. He just may prove them all wrong - Telecom

South Florida CEO, Sept, 2003

"My personal obituary and the obituary for the company has been written many times over the last 20 years," says Manny Medina, CEO of Terremark WorldWide Inc. "There is nothing surprising there."

Indeed, Medina--once a dominant developer in Miami--has gone through more lives than a cat. He used a couple of them in the real estate collapse of the late '80s, nearly losing everything before coming back with innovative new products, like the city's first business condo-hotel. He was also an early developer of "telecom hotels"--offices engineered for telcos--which led him, at the close of the 1990s, to the momentous decision to morph his company from real estate to Internet communications.

Now Medina is using a few more of his lives to land his current creation on its feet: downtown Miami's Network Access Point of the Americas, one of only five Tier-1 NAPs in the world. Opened in mid-2001, the NAP is a global data switching and service center, interconnecting more than 100 clients--lots of them big names--and linking them at lighting speed with the rest of the world. The center itself is a futuristic high-security, high-tech facility, a sort of "Dr. Strangelove" meets Epcot Center.

Medina has faced some tough challenges keeping Terremark going while momentum builds at the Miami NAP--along with three other NAPs Terremark now has in Sao Paulo, Madrid and Silicon Valley. He has also faced the heckle of doubters, from The Miami Herald to auditing firm PriceWaterhouseCoopers, which for three years has questioned whether Terremark can succeed.

Most of Terremark's troubles have come from the global dotcom bust, which had the bad timing to happen just as the Miami NAP was being built. Medina refused, however, to succumb to the same pressures which led BellSouth to abandon MIX, its competing NAP: the no-show of anticipated demand.

In the face of his struggles, Medina has used every strategy at his disposal--including millions in personal loans--and has turned the challenge into a mission. "It's very hard to express why we've fought so hard for the NAP, and what this vision is," says Medina. "This is a very unique opportunity, once in a lifetime, that will never happen again. Forget about the glitz and the technology--what we've really created is a virtual marketplace, unlike anywhere in the world. It's like building the first airport."

Medina's most dramatic strokes to keep the NAP alive while demand catches up took place this spring. At the end of April, he closed a deal which had been six months in the making: the conversion of $22.6 million of Terremark debt into equity. Investor group CRG LLC paid $10.3 million to buy the debt from two creditors--Cupertino Electric and Kinetics Systems, contractors for the Miami NAP--turning it into 30 million shares of stock. At the same time, Medina also avoided defaulting on $43.9 million in debt from Ocean Bank, converting $15 million to equity and securing three more years to repay the balance. Finally, Medina raised another $25 million through a private placement of convertible debentures, mostly from new investors, including New York-based investment firm Neuberger Berman.

All told, debt swaps this year eliminated $54 million in debt from the balance sheet, reducing annual interest payments by $5.2 million. And while the deals meant a 50 percent dilution of Terremark stock, Medina considers that a big win. "Many times we were offered solutions that meant dilutions of 500 percent, 600 percent, basically giving the company away," he says.

Granted, Terremark has a long way yet to go--in its fiscal year ending March 31, it reported losses of $41.2 million, or 18 cents a share. Still, that's less than the $57.4 million loss, or 29 cents a share, it lost the year before. Also noteworthy is that the $14.7 million in consolidated revenue for the year reflected a $7.8 million increase in data-center revenue.

Now, with demand for Internet traffic continuing to increase almost daily, Medina predicts he will meet his goal of positive cash flow by the end of the year. If he does, he will have proven that wining is sometimes just being the last person still standing. "Other players dropped out [but] the way that information is transmitted isn't going to subside any time soon," says Medina. "It's going to continue to skyrocket. We're in a privileged position right now and the opportunities are enormous."