NEWARK, NJ–December 20, 2001 – IDT Corporation (NYSE: IDT and IDT.B) today announced that it has acquired substantially all the operating assets of Winstar Communications, Inc. pursuant to a sale order by the US Bankruptcy Court in Winstar’s ongoing bankruptcy proceedings. The purchase price is $ 42.5 million and is to be paid $ 30 million in cash and $ 12.5 million in IDT Class B Common Stock.
“This is an incredible deal. It might not top the Dutch settlers buying the Island of Manhattan for twenty four dollars, but it comes pretty close,” said IDT Chairman Howard Jonas. “With almost $ 5 billion in assets and about $ 200 million in annual revenue, Winstar has great potential. And I have a plan to make it a very profitable venture.”
IDT also announced that it has named a new management team for Winstar to begin implementing IDT’s plan to lead the company to profitability. Charles Garner, CEO of IDT Ventures will be Winstar’ s Interim CEO and Moshe Kaganoff has been named Interim President. As part of the deal, IDT has agreed to invest $60 million into Winstar to be used as working capital.
“Winstar represents much more than the acquisition of $ 5 Billion dollars in assets. It’s a vital going concern with valuable customers and employees,” said Charles Garner, Winstar’s Interim CEO. “Our goal is to service the company’s existing customers and to grow our business and workforce over time.”
Winstar Communications operates as a Competitive Local Exchange Carrier (CLEC ) in 50 states using fixed wireless technology. The company’s core business is providing telephone and data services to enterprise customers.
“The Holy Grail for the telecom industry has always been in finding a reliable and practical solution for bridging the elusive “last mile”, the term used for the distance between our switch and the customer’s telephone,” said Jim Courter IDT’s CEO and Vice Chairman. “Winstar’s fixed wireless technology offers a solid last mile solution and is a great fit with IDT’s long distance services and extensive fiber assets. It allows us to offer a full spectrum of voice and data services to business customers.”
As part of the Sale Agreement IDT has agreed to give 5 % of the equity of the new Winstar operations to a group of creditors of Winstar during the Bankruptcy. IDT Corporation will retain the remaining 95 % of the equity.
IDT is a leading facilities-based, multinational carrier that provides a broad range of telecommunications services to its retail and wholesale customers worldwide.
Through its own national telecommunications backbone and fiber optic network infrastructure, IDT provides its customers with integrated and competitively priced international and domestic long distance telephony and prepaid calling cards. IDT Ventures is the IDT subsidiary responsible for the Company’s initiatives outside of its core telecom business. Through its IDT Investments subsidiary, IDT has equity interests in several telecom and Internet-related companies.
Except for historical information, all of the expectations and assumptions contained in the foregoing are forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933 and the Securities Exchange Act of 1934, involving risks and uncertainties. These statements refer to our plans to implement our growth strategy, improve our financial performance, expand our infrastructure, develop new products and services, expand our customer base and enter international markets. The forward-looking statements also include our expectations concerning factors affecting the markets for our products, including the demand for long distance telecommunications, and Internet access services. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the results that we anticipate. These risks and uncertainties include, but are not limited to , those risks discussed in this release. In addition to the factors specifically noted in the forward-looking statements, other important factors that could result in those differences include (a) general economic conditions in the telecommunications and Internet markets, including inflation, recession, interest rates, and other economic factors; (b) casualty to or other disruption of our facilities and operations; (c) those discussed in our Annual Report on Form 10-K for the period ended July 31, 2001; and (d) other factors that generally affect the business of telecommunications, Internet and other communications companies. We assume no obligation to update these forward-looking statements or to update the reasons actual results could differ materially from the results anticipated in the forward-looking statements.