| December 21, 1999 - CAIS Internet (NASDAQ:CAIS) a leading
provider of broadband Internet access solutions, announced today it had
signed a definitive agreement with an affiliate of Kohlberg Kravis Roberts
Co. (KKR) under which KKR will make a strategic investment of up to $200
million in this fast-growing company.
CAIS
currently has master agreements to be the exclusive provider of high-speed
Internet access to over 9,000 hotels worldwide, covering in excess of 1.1
million rooms. In addition, the company has long-term agreements to provide
Internet access to 575 multi-family communities, reaching close to 200,000
residences.
An initial $100 million investment will be in the form of convertible
preferred stock with a conversion price of $16.50 per share. The agreement
also includes a one-year option for KKR to purchase an additional $100
million of convertible preferred stock with a conversion price of $20.00
per share.
KKR’s initial purchase will represent a 16.5 percent fully diluted capital
interest in CAIS Internet. Upon the exercise of the option, KKR’s investment
would represent a 26.4 percent fully diluted capital interest in CAIS Internet.
As a result of its investment, KKR will have two of eight seats on CAIS
Internet’s Board of Directors. KKR would have three Board seats upon
the exercise of the option.
Assuming the exercise of KKR’s option, the average conversion price
represents a 22% premium to CAIS’s 30-day average closing price.
“KKR is discerning in its investments, and its relationship with CAIS
represents the perfect marriage between “traditional” strategic financial
capital and the new online economy,” said Ulysses G. Auger II, Chief Executive
Officer of CAIS Internet. “We welcome KKR’s
investment as a key validation of our business model. We are fortunate
to be partnering with a firm with significant experience in the communications
industry as well as with substantial access to investment capital. KKR’s
investment will enable us to ramp up our growth plans in the hospitality
and apartment markets, both of which offer accelerating opportunities for
our patented, simultaneous telephone and high speed Internet access solutions.”
James H. Greene, Jr., a KKR partner, said, “CAIS is well positioned
to provide faster, more cost effective Internet access and enhanced Internet
services. We believe that CAIS has all the ingredients for significant
value creation - an expanding customer base, exclusive long-term contracts,
patented technology and, most important, a strong management team. This
investment is another example of our ongoing focus on rapidly growing segments
within the communications industry.”
During 1999, CAIS signed a number of exclusive long-term contracts to
provide turn-key broadband access and portal content solutions to hotels
and apartment buildings with reliable, affordable services and customized
content for an enhanced online experience.
CAIS Internet has master agreements with major hotel chains like Hilton
Hotels, John Q. Hammons Hotels, Carlson Worldwide Properties, Staybridge
Suites by Holiday Inn, Cendant Corporation and Bass Hotels including
brands like Hilton, Hilton Garden Inn, Radisson, Embassy Suites, Doubletree
Suites, Ramada, Hampton Inn, Holiday Inn, Sheraton, Crowne Plaza and Inter-Continental.
Most recently CAIS signed a multi-year contract with Prime Hospitality,
which includes the AmeriSuites and Wellesley Inn Suites brands. Many
of these hotels also plan to carry CAIS meeting room and kiosk Internet
access solutions.
CAIS is also a leader in delivering Internet solutions to apartment
communities, having signed contracts covering more than 575 buildings.
To date, CAIS has a strategic relationship with One Point Communications,
and contracts with Town Country, Tarragon Realty and United Dominion
apartment residences nationwide.
The Company was advised by Bear Stearns. KKR’s initial investment is
expected to be made, subject to customary closing conditions, in January
of 2000.
KKR is a private investment firm with offices in New York City, Menlo
Park, and London. Recent communications industry investments include Reltec
Corporation, Amphenol Corporation, Birch Telecom, Inc. and Zhone Technologies,
Inc.
About CAIS Internet
| CAIS Internet, Inc. (Nasdaq: CAIS) is a leading broadband
access solutions company. CAIS provides customers with comprehensive high
speed Internet solutions while at home in apartments, at work in small-to-medium
businesses, or on-the-go at hotels, airports, travel plazas, cruise ships
and retail stores.
Whether it’s an innovative solution for DSL leased-line
dedicated access, creating an in-building network for multiple users, or
providing a public area Internet kiosk, the company delivers a cost-effective,
easy and convenient Internet experience for customers.
The customer experience is the result of a one-stop, integrated
solutions package of innovative CAIS network access and technologies, award-winning
IPORT™software, customer support, portal content and systems.
CAIS Internet currently is the designated Internet access
solution in the largest footprint of hotels and apartment buildings nationwide.
Additionally, CAIS recently unveiled its portal with 110 leading Internet
content partners, which upon full installation of its properties will be
the widest viewed in the hospitality industry and multifamily or apartment
community.
The CAIS portal is the first portal built at broadband
speeds, especially designed to provide a media-rich experience for the
millions of CAIS customers who will log onto its service.
Combined with CAIS Internet, the company’s software subsidiary
CAIS Software Solutions, and its business center subsidiary Business Anywhere™CAIS
brings broadband connectivity to markets where Internet access did not
previously exist. CAIS Internet operates a Cisco-Powered, clear-channel
Internet and ATM Network.
CAIS currently peers with public and private partners,
and at national exchange points MAE East, MAE East ATM, MAE West, and AADS.
CAIS recently announced an agreement with Qwest that expands the CAIS network
to 38 POPs nationwide, which accelerated CAIS network development one year
ahead of forecast. Qwest also took a 6.2% equity stake in the broadband
solutions provider.
CAIS Internet is headquartered in Washington, DC. |
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