XFONE, Inc Gets 33.4 Million To Acquire NTS Communications Inc
Jackson, Mississippi – December 18, 2007 – XFONE, Inc., a multinational diversified communications services company, announced that it has signed subscription agreements for approximately $33.4 million in non-secured debt and equity to finance the acquisition of NTS Communications Inc. (NTS). The bonds are rated A3 by Midroog Ltd., an affiliate of Moody’s.
Guy Nissenson, President and CEO of XFONE, stated, “This financing, combined with the previous $5.85 million equity investment by various investors as well as $6.6 million in new equity from certain NTS shareholders, provides a solid capital structure for the closing of the NTS acquisition in January. This combination of debt and equity resulted in favorable interest rates and a strong combined balance sheet with over $40 million in equity. We look forward to closing the acquisition and driving growth and enhanced profitability in 2008.”
The aggregate subscription amount will be held in escrow pending consummation of the acquisition of NTS and, with respect to the equity investment, also the approval from the American Stock Exchange and the Tel Aviv Stock Exchange (“TASE”) for the listing of the shares, including those underlying the warrants. Shareholders approved the acquisition and the related issuances of common stock at the December 17, 2007 Annual Shareholder Meeting and the acquisition is expected to close in January pending final receipt of regulatory approvals where appropriate.
The Company signed definitive agreements for the issuance of non-secured debt of approximately $25.4 million to financial institutions in Israel. The bonds will be linked to the Israeli Consumer Price Index (CPI) and will bear 9% interest, also linked to the CPI, until the start date of the bonds’ listing for trade on the TASE at which point the interest rate for the unpaid balance of the bonds will be reduced by 1% to an annual interest rate of 8%. The Company intends to take immediate actions to list the bonds for trading on the TASE. The purchasers of the bonds will also receive an aggregate of 956,020 warrants to purchase XFONE common stock at $3.50 per share, with a term of four years.
The Company also raised approximately $8 million through the issuance of 1,300,000 units to parties affiliated with Gagnon Securities as well as Richard L. Scott Investments. Richard L. Scott Investments LLC, agreed to purchase 800,000 units, each of which consists of two shares of common stock and one warrant at a price of $6.20 per unit, for a total subscription amount of $4,960,000. Certain investors who are affiliated with or are customers of Gagnon Securities LLC agreed to purchase an aggregate of 500,000 units, for a total subscription amount of $3,100,000. The warrants are exercisable for a period of five years from issuance at a price of $3.10 per share.
On August 23, 2007, XFONE announced the signing of a definitive agreement to acquire NTS Communications, Inc., a premier provider of integrated voice, data and video solutions, headquartered in Lubbock, Texas with approximately 47,500 residential and business customers. NTS serves a diverse and stable customer base that includes financial institutions, energy companies, medical enterprises, and governmental and educational entities. NTS has invested over $23 million in developing a Fiber-to-the-Premise platform, which enables unique economies and allows NTS to provide a voice, data and cable “triple play” offering to residential and business customers.
For the first nine months of 2007, on an unaudited pro forma combined basis, adjusted XFONE, NTS and Auracall revenues totaled $85.8 million with approximately $11 million in EBITDA.
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