Barclays, WestLB Lead $Billion Financing for Flag Pacific-1
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[May 9] FLAG Telecom announced Tuesday that Barclays Capital and and Westdeutsche Landesbank Girozentrale (WestLB) will lead the financing of its FLAG Pacific-1 cable system, raising $1.1 billion for expansion of the network to 64,500 kilometers.
FLAG Pacific-1 will support the next generation of Internet Protocol over optical data networks, providing high-speed connectivity between Tokyo, Vancouver, Seattle, San Francisco, Los Angeles and other cities.
The financing takes the form of an underwritten commitment for a 8.5-year $1.1 billion construction and term loan, with financial closure expected in the third quarter 2000. The new cable system should be ready to enter service as a single loop in early 2002 and as a full loop later that year.
FLAG Telecom points out that FLAG Pacific-1, with its loop architecture, will have reliability advantages over single spur cables. It will connect seamlessly with the rest of the FLAG Telecom network.
"The Pacific route was the logical next step in our development as it is projected to become one of the largest world routes and will strengthen our existing position in the Asia Pacific region," said McCormack.
McCormack cautioned that the timescales set in place were quite demanding, but was confident that with the previous experience of Barclays Capital and WestLB in funding subsea fiberoptic cables, the now fully-funded project would be brought in on budget.
FLAG's Europe-Asia cable runs between the U.K. and Japan, having entered commercial service in November 1997. Its Atlantic-1 cable will be the world's first transoceanic terabit cable system, and is currently under construction for services starting early next year.
Barclays Capital is the investment banking division of Barclays Bank Plc.