Primus Telecommunications Group Inc., a telecommunications provider targeting businesses, residential customers and communications companies in Asia, Europe and the United States, has raised $42 million in convertible preferred stock through insurance and financial services company American International Group Inc. and another unnamed institutional investor.
Primus says it plans to use the funds for “general corporate purposes, including working capital, debt reduction and potential acquisitions involving industry consolidation opportunities.”
The investment, which Primus announced Dec. 31, dilutes common shares and represents a 25 percent interest in the company. Primus says the transaction also gives it the right to issue up to $75 million of additional convertible preferred stock on similar terms through June 1, 2004.
“Altogether we believe the raise gives the company flexibility to meet required payments of vendor lines and to handle maturities of debt over the next two years,” said Kaufman Bros. analyst Vik Grover in a research note Thursday. Kaufman maintains a buy rating on PRIMUS, which was trading Thursday at $1.90 on the Nasdaq.
Primus, headquartered in McLean, Va., posted a $27 million third-quarter loss off $261 million in revenue. Its earnings before interest, taxes, depreciation and amortization (EBITDA) grew to $26 million, totaling $58 million for the first nine months of the year.
In the third quarter, PRIMUS generated about half of its revenue through residential sales, and the remainder through a combination of business and carrier sales.
