Reliance hikes Flag offer by $4 m

NEW DELHI: Flag Telecom, provider of international wholesale network transport and communications services, has announced that it has entered into a second amendment to the Agreement and Plan of Amalgamation with Reliance Gateway. This would increase the consideration of $207 million to approximately $211 million in cash, payable to Flag Telecom’s shareholders and option holders, reflecting a new price per share of $97.41.

The company release stated that in addition, the largest shareholder of FLAG Telecom, Harbert Distressed Investment Master Fund, Ltd (Harbert), has entered into a voting agreement with Flag Telecom and Reliance Gateway, by which Harbert has agreed to vote in favor of the amalgamation between FLAG Telecom and Reliance Gateway. Harbert is a direct holder of 37.1 percent of Flag Telecom’s outstanding common shares. In connection with the voting agreement, Reliance Gateway has agreed to pay Harbert $ one million in cash upon the consummation of the amalgamation.

The release further states that, as part of the voting agreement with Harbert, FLAG Telecom has agreed to terminate the registration of its common shares under the Securities and Exchange Act of 1934, as amended prior to the date on which FLAG Telecom holds a special meeting of shareholders, in order to vote on the amalgamation.

A Form 15 was filed with the Securities and Exchange Commission (SEC) yesterday and Flag Telecom intends to seek to accelerate the de-registration. The company’s special shareholders’ meeting is currently, scheduled to be held at 10am on December 22, 2003 at New York.

Notwithstanding the filing of the Form 15, FLAG Telecom intends to continue to file with the SEC the periodic reports that it would have filed in the absence of the de-registration. It also anticipates that its common shares will continue to trade under the ticker symbol "FTGLF.PK" on the "pink sheets" of the over-the-counter market, until consummation of the amalgamation.

(CyberMedia News Service)