Sale of Patent Assets Expected to Yield Greater Merger Consideration to Arbinet's Stockholders in Acquisition by Primus
HERNDON, Va., Feb. 14, 2011 - Arbinet Corporation (Nasdaq: ARBX) ("Arbinet"), a leading provider of telecommunications services to fixed and mobile operators, announced that it signed a definitive agreement to sell its portfolio of patents and patent applications for a purchase price of $4,000,000 to AIP Acquisition LLC ("AIP") on February 11, 2011. Arbinet's patent sale to AIP is expected to close this week. In connection with the sale, Arbinet and AIP entered into a license agreement, which, among other things, will grant to Arbinet and its affiliates a royalty-free, worldwide, assignable and perpetual license to the patents, patent applications and associated rights when the patent sale closes.
Arbinet previously announced on November 11, 2010 that it entered into a definitive merger agreement with Primus Telecommunications Group, Incorporated ("Primus"), pursuant to which Primus is to acquire Arbinet in a stock-for-stock transaction. Under the terms of the merger agreement, Arbinet retained the right, in its sole discretion, to spin-off to its stockholders or to sell to a third party for cash certain identified patents and rights arising from such patents, subject to certain limitations, including that all transaction costs, fees and expenses and gross tax liabilities attributable to any such spin-off or sale would not exceed $350,000 in the aggregate and that Arbinet would first grant Primus a royalty-free, worldwide, assignable and perpetual license and right to use any and all such patents and rights.
On February 11, 2011, Arbinet notified Primus of Arbinet's election to add the net proceeds from the sale of its portfolio of patents and patent applications, dollar for dollar, to the aggregate base merger consideration of $28,000,000, which will increase the exchange ratio in the merger to greater benefit Arbinet's stockholders, as explained below.
In connection with the proposed merger, Arbinet and Primus filed a definitive joint proxy statement/prospectus with the Securities and Exchange Commission (the "SEC") on January 14, 2011. As described in the joint proxy statement/prospectus, the stockholder meetings for both Arbinet and Primus have been set for February 25, 2011. Assuming all conditions precedent have been satisfied, the merger is expected to close on February 28, 2011. Under the terms of the license agreement signed by Arbinet on February 11, 2011 simultaneously with the entry into the definitive agreement to sell Arbinet's patent assets, upon the consummation of the merger between Arbinet and Primus, Primus and each of its affiliates will automatically be entitled to the same rights and benefits as Arbinet under the license agreement without any further action by Arbinet, Primus, AIP or any of their respective affiliates.
Effect of Arbinet's Patent Sale on Exchange Ratio in Acquisition by Primus
Arbinet estimates the net proceeds from the sale of Arbinet's portfolio of patents and patent applications would equal $3,650,000 and the aggregate base merger consideration would be increased by such net proceeds from $28,000,000 to $31,650,000. The actual exchange ratio in the merger cannot be determined until just before closing of the merger because the calculation of such ratio depends on the number of shares of Arbinet common stock issued and outstanding immediately prior to the consummation of the merger and shares that may become issuable as Primus common stock at or after the closing of the merger in connection with Primus's assumption of Arbinet's outstanding warrants, options, stock appreciation rights and other equity awards (subject to the exclusion of certain issuable shares that fail to meet certain criteria set forth in the merger agreement). Therefore, relying on the assumptions set forth in each of the joint proxy statement/prospectus dated and filed on January 19, 2011 with the SEC and delivered to Arbinet's and Primus's stockholders of record, and the registration statement, as amended, filed by Primus on January 14, 2011 with the SEC, other than with respect to the assumption regarding aggregate base merger consideration, which has been assumed to be $31,650,000 (instead of $28,000,000, as set forth in the joint proxy statement/prospectus and the registration statement), the exchange ratio, as of January 7, 2011, would be expected to be 0.5794 (instead of 0.5126, as set forth in the joint proxy statement/prospectus and the registration statement). The actual exchange ratio may vary significantly from the ratio determined above based on the assumptions in the joint proxy statement/prospectus and the registration statement and with respect to the aggregate base merger consideration amount provided above.
It is anticipated that, immediately following completion of the merger, and based on the same assumptions as described in the immediately preceding paragraph, Arbinet stockholders (by virtue of holding Arbinet common stock immediately prior to the effective time of the merger) would own approximately 24.6% of the outstanding shares of Primus common stock (instead of 22% of the outstanding shares of Primus common stock, as set forth in the joint proxy statement/prospectus and the registration statement).
Arbinet is a leading provider of international voice, data and managed communications services for fixed, mobile and wholesale carriers. With more than 1,200 carrier customers across the globe connected to Arbinet's network, Arbinet combines global scale with sophisticated platform intelligence, call routing and industry leading credit management and settlement capabilities. Arbinet offers these communication services through three primary product offerings including thexchangeSM, Carrier Services and PrivateExchangeSM. Arbinet's thexchangeSM platform, the largest online wholesale voice trading exchange, continues to provide customers with access to a neutral marketplace to buy and sell global voice and data traffic. Arbinet owns and operates a global network of next generation IP soft switches, media gateways, IP transport and co-location centers located in the United States, United Kingdom, Hong Kong, Frankfurt and Miami. Founded in 1996, Arbinet is headquartered in Herndon, Virginia.
Chief Financial Officer
Andrea Rose / Jed Repko
Wilkinson Brimmer Katcher
SOURCE Arbinet Corporation