New Edge Networks secured $77.5 million in new financing to complete the company's build out of its network. The company opted against going out to bid for the new facility and instead awarded the deal to First Union, a first-time lender for New Edge, said Sal Cinquegrani, executive director of investor relations. "It's remarkable considering the state of telecom right now," said Cinquegrani, who was involved in the financing. "We met the folks at First Union through other contacts, and they were very interested in our story and made an investment in us [with the bank loan]. They offered a package that was most attractive to us."
The financing breaks down into $40 million in private equity from its current investors and $37.5 million in senior secured credit facilities from First Union. This brings the company's total in capital investments to $380 million, Cinquegrani said. New Edge, based in Vancouver, Wash., provides broadband to 350 cities and 29 states. The privately owned company has recently gone through two rounds of layoffs. The money will go towards the company's revised business plan as it works towards turning a profit.
Cinquegrani says New Edge has managed to stay afloat in a sinking telecom market partly because it has diversified revenue streams, including advanced broadband to small and mid-sized companies. There are no other banks in the syndicate, and the deal is closed. However, Cinquegrani says the company is always open to making new contacts. He predicts the company will be positive in its earnings before interest, taxation, depreciation and amortization (EBITDA) by next year. "The investors know we're not EBITDA-positive yet, but they gave us a vote of confidence with their wallets," he said.