| Metromedia Fiber Network, Inc. | |||
| Ticker: | MFNX | 110 East 42nd Street, Suite 1502 | |
| Exchange: | NASDAQ-National Market | New York, NY 10017 | |
| Industry: | Transportation (SIC Code 4813) | (212) 687-9177 | |
| # of Employees: | 26 | ||
| Type of Shares: | Class A Common Shares | Filing Date: | 8/14/97 | |
| U.S. Shares: | 6,730,000 | Offer Date: | 10/28/97 | |
| Non-U.S. Shares: | 1,190,000 | Filing Range: | $14.00 - $16.00 | |
| Primary Shares: | 7,920,000 | Offer Price: | $16.00 | |
| Secondary Shares: | 0 | Gross Spread: | $1.12 | |
| Offering Amount: | $118,800,000 | Selling: | $0.67 | |
| Expenses: | - | Reallowance: | $0.10 | |
| Shares Out After: | - |
| Manager | Tier | Phone |
| Salomon Brothers Inc. | Lead Manager | (212) 783-2947 |
| Deutsche Morgan Grenfell | Co-manager | (212) 469-5600 |
| Donaldson, Lufkin & Jenrette Securities Corp. | Co-manager | (212) 371-0641 |
| Issuer's Law Firm: | Paul, Weiss, Rifkind, Wharton & Garrison |
| Bank's Law Firm: | Cravath, Swaine & Moore |
| Auditor: | Ernst & Young |
Dollar amounts in U.S. millions except for per share data | |||||
| 6 Month Ending Financials | |||||
| Full Year Audited Income | Latest Unaudited Income | Prior Unaudited Income | Balance Sheet | ||
| 12/31/96 | 6/30/97 | 6/30/96 | 6/30/97 | ||
| Revenue: | $0.24 | $0.54 | $0.08 | Assets: | $31.65 |
| Net Income: | -$10.36 | -$19.99 | -$7.21 | Curr Assets: | $23.51 |
| EPS: | $0.47 | -$0.86 | -$0.36 | Liabilities: | -$19,042,819.35 |
| Prior EPS: | $0.26 | $0.83 | -$3.85 | Curr Liabilities: | $2.48 |
| Cash Flow/Oper: | -$2.75 | $22.41 | $3.98 | Equity: | $19,042,851.00 |
| Cash Flow/Fin: | $4.27 | -$0.81 | -$0.14 | Cash: | $22.89 |
| Cash Flow/Inv: | -$1.07 | -$0.81 | Working Cap: | $21.03 | |
| Business Description |
| The company is a facilities-based provider of technologically advanced, high-bandwidth, fiber optic communications infrastructure to carrier and corporate/government customers. The Company is expanding its existing network to encompass approximately 229,000 fiber miles or 643 route miles, concentrated in the northeastern United States, a market which the Company believes is characterized by significant demand for and limited supply of fiber optic capacity. The fiber infrastructure leased by MFN to its customers provides high-bandwidth capacity for customers that seek to establish secure communications networks for the transmission of large amounts of voice, data and video. For example, a pair of MFN fiber optic strands can transmit up to 8.6 gigabits of data per second or the equivalent of approximately 129,000 simultaneous voice conversations. The Company tailors the amount of fiber capacity leased to the needs of its customers. Certain customers that lease fiber optic capacity from the Company connect their own transmission equipment to the leased fiber, thereby obtaining a fixed-cost, secure communications alternative to the metered communications services offered by traditional providers. |
| Competition |
| Fiber optic systems are currently under construction both locally and nationally. In New York City, for example, seven franchisees have been granted the right to install and operate a telecommunications network within the city. Development of fiber optic networks is also continuing on a national scale; for example, one provider of fiber is currently in the midst of constructing a cross-continental long distancefiber optic network from Los Angeles to New York and another is constructing a fiber-based national backbone network which will connect 92 metropolitan areas and span approximately 13,000 miles. The construction of these networks enables their owners to either lease access to their networks to other communications carriers or large corporate or government customers seeking high bandwidth capacity, without these customers having to incur costly expenditures associated with building networks of their own. Alternatively, some network owners may choose to use their infrastructure to provide switched voice and data services, competing directly with ILECs and IXCs. Currently, MFN does not provide such services or plan to provide such services. In New York City and the cities where MFN plans to deploy fiber optic communications networks, the Company faces significant competition from the ILECs, which currently dominate their local communications markets. The Company also faces competition from CLECs and other potential competitors in New York City and will face competition in the cities in which the Company plans to build its networks. Many of the Company's competitors have financial, management and other resources substantially greater than those of the Company, as well as other competitive advantages over the Company, including established reputations in the communications market. Various communications carriers already own fiber optic cables as part of their communications networks. Accordingly, each of these carriers could, and some do, compete directly with the Company in the market for leasing fiber capacity. In addition, although CLECs generally provide a wider array of services to their customers than the Company presently provides to its customers, CLECs nevertheless represent an alternative means by which a potential customer of the Company could obtain direct access to an IXC POP or other site of the customer's choosing. Thus, CLECs could compete with the Company. Some communications carriers and local cable companies have extensive networks in place that could be upgraded to fiber optic cable, as well as numerous personnel and substantial resources to undertake the equisite construction to so equip their networks. To the extent that communications carriers and local cable companies decide to equip their networks with fiber optic cable, they are potential direct competitors of the Company provided that these competitors are willing to offer this capacity to all of their customers. The Company believes that as competition in the local exchange market develops, a fundamental division between the needs of corporate, governmental and institutional end users and residential end users will drive the creation of differentiated communications services and service providers. The Company believes that the IXCs, ISPs, wireless carriers and corporate and government customers on which it focuses will have distinct requirements, including maximum reliability, consistent high quality transmissions, capacity for high-speed data transmissions, diverse routing and responsive customer service. The Company believes that it will be able to satisfy the needs of such customers. |
| Business Plan |
| The Company's objective is to become the preferred facilities-based provider of broadband communications infrastructure to communications carriers, corporations and government agencies, primarily in the northeastern United States. The following are the key elements of the company's strategy to achieve this objective: (I) Establish the company as the preferred carriers' carrier of braodband communications infrastructure, (ii) position the company as the preferred provider of braodband communications infrastructure to corporate and government customers, (iii) strengthen the company's competitive position by expanding the company network, (iv) utilize strategic relationships to expand the reach of the company network, (v) create a low cost position, (vi) install a technologically advanced network, (vii) build on management experience and (viii) build-out of networks. |
| Use of Proceeds |
| The proceeds from the proposed offering will be used for capital expenditures associated with the build-out of the company's network, the development and introduction of new services and general corporate purposes and working capital. |
| Officer Name | Title | Age |
| Stephen A. Garofalo | Chairman of the Board, Chief Executive Officer and Secretary | 45 |
| Stephen W. Ellis | Chief Financial Officer | 47 |
| Howard M. Finklestein | President, Chief Operating Officer and Director | 44 |
| Vincent A. Galluccio | Senior Vice President--Business Development and Director | 51 |
| James Urbelis | Vice President--Easements and Construction | 45 |
| John McLeod | Vice President--Marketing | 39 |
| John S. Mahon | Vice President--Network Engineering | 51 |
| Louis J. Gambino | Vice President--Network Operations | 45 |
| Nicholas M. Tanzi | Vice President--Sales | 38 |