Barclays, WestLB Lead $Billion Financing for Flag Pacific-1

[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.


Ed McCormack, chief operating and finance officer of FLAG
Telecom, said the company’s vision becoming the top “carriers’ carrier”
with a 100,000 route kilometer network was well underway.


“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.

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