UNITED STATES |
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SECURITIES AND EXCHANGE COMMISSION |
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Washington, D.C. 20549 |
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SCHEDULE 14A |
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Proxy
Statement Pursuant to Section 14(a) of |
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Filed by the Registrant x |
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Filed by a Party other than the Registrant o |
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Check the appropriate box: |
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to §240.14a-12 |
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NEON Communications Group, Inc. |
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(Name of Registrant as Specified In Its Charter) |
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant) |
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No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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Title of each class of securities to which transaction applies: |
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Proposed maximum aggregate value of transaction: |
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The material on the pages that follow was prepared for use by NEON Communications Group, Inc. (the "Company") as talking points for industry conferences.
Cautionary Statement Regarding Forward-Looking Statements
Certain statements in these materials constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve unknown and uncertain risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements or may cause the conditions to the proposed merger of the Company with a subsidiary of RCN Corporation (the "Merger") not to be satisfied or cause the Merger not to occur. Forward-looking statements are subject to numerous assumptions, risks, and uncertainties and the statements looking forward beyond 2007 are subject to greater uncertainty because of the increased likelihood of changes in underlying factors and assumptions. Actual results could differ materially from those anticipated by the forward-looking statements. Among these factors are the Companys history of operating losses, factors affecting its future operating results and capital expenditures, its ability to retain existing customers and attract new customers, its ability to achieve cost-savings and generate positive cash flow, the effects of the announcement of the proposed Merger on our business and our relationships with customers and employees, the results of the review of the proposed Merger by various regulatory agencies, and any conditions imposed on the new company in connection with the consummation of the Merger, approval of the Merger by the Companys stockholders and satisfaction of various other conditions to the closing of the Merger, and other factors affecting the Companys business generally. For a general discussion of risks affecting the Companys business, see Risk Factors in the Companys Annual Report on Form 10-K for the year ended September 30, 2006 and in Part II in the Company's Form 10-Q for the quarter ended June 30, 2007.
NEON/RCN Talking Points |
1. Key Messages
The merger provides a valuable scaling opportunity that will additionally enable the combined entity to compete in the nations busiest telecommunications corridor
It provides new geography, new services and capabilities to both entities
Both companies have similar cultures, focus and service sets which bodes well for the newly formed company
The teams have long standing working relationships, which will speed and aid in a seamless integration
Both companies are focused on strong customer service and flawless execution and plan to maintain that same high level of customer service post merger
RCN expects to leverage the strengths and talents of the combined team and to adopt the best practices of both companies
The combined entity is financially strong and well positioned to capture future growth opportunities such as new markets, new products and new customer segments
The deal is expected to close during the fourth quarter of 2007, subject to regulatory approvals as well as certain other closing conditions
2. RCNs Strategic Positioning
NEON offers RCN a crucial scaling opportunity in the communication intensive Northeast and Mid-Atlantic corridor. NEON is a wholesale carrier offering a comprehensive suite of high bandwidth transport services primarily to carrier and large enterprise customers from Maine to Virginia. NEONs state-of-the-art network and facilities are complementary to and/or usefully redundant with RCNs network. Further, NEON offers RCN tremendous instantaneous commercial expansion as well as future expansion potential for both residential and commercial customers. This transaction exemplifies RCNs asset strategy and represents the next stage in the evolution of RCNs Business Solutions Division:
NEON adds a complementary customer base, particularly in the carrier market
Meaningful incremental growth potential in both commercial (wholesale and retail) and residential markets
NEON Adds more than 20% (206 buildings) to RCNs building list, including 97 Verizon Central Offices
Quadruples the number of collocation buildings RCN serves
Adds a second Carrier/Commercial grade NOC to RCN Business Solutions
Unique long-term value proposition
Deal Facts
RCN will pay up to $5.25 per NEON share for expected total consideration of approximately $260 million.
Potential purchase price adjustment dependent on NEONs financial performance.
RCN funding transaction with an additional term loan under recently completed credit facility - has received binding commitment from Deutsche Bank - neither the acquisition nor the additional term loan requires additional consents from existing lenders
Approved by the Boards of Directors of both companies
NEON shareholders approval required RCN shareholders approval is not required
3. Financial Plans and Objectives
Subject to finalization upon completion of the acquisition:
Expect to realize $10 million or more in potential revenue and expense synergies, primarily driven by SG&A reduction opportunities
4. Background
The deal fits:
All the strategic, growth potential and return characteristics RCN has looked for in a CLEC opportunity fits very well with RCN Business Solutions strategy
The combination of the two companies helps fill the void created by ongoing telecom consolidation significantly strengthens RCNs position in the market
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5. Combined Company Snapshot (NEON & RCN Business Solutions)
Route Miles |
~ 5,626 |
Fiber Miles |
~315,644 |
# of On-Net Buildings |
More than 1,100 in total |
Network Coverage |
Maine to Virginia and Chicago metro |
Network Operations Centers |
New York City NY, Westborough MA and Lanham MD |
# of Employees |
~278 |
# of Customers |
~1,320 |
6. Benefits
Common Benefits
Similar service offering including SONET, Ethernet, Wavelength, collocation and custom networks
Complementary networks that are largely diverse from one another
The networks are highly reliable with strong 24/7 operational support
Similar and complementary technology platforms and operational approach
Similar corporate cultures of customer-oriented focus and high integrity sales approach
Long standing working relationship between the companies, which will speed and ease a successful integration
Similar utility heritage and networks that leverage unique utility rights of way
RCN Benefits
Immediate scale plus catalyst and resources for further growth
Immediately provides an expanded network on which to sell retail commercial services
Brings experienced sales resources with proven wholesale capabilities and engineering/ operations talent with carrier expertise
Offers additional retail sales leverage from NEON Central Offices in Tier 1 and Tier 2 markets
New/expanded market footprint into Tier 1 and Tier 2 markets - with additional core network coverage in Portland, Burlington, Boston, Providence, Hartford, Albany, NYC, Newark, Philadelphia, Baltimore and Washington D.C.; as well as growth potential to surrounding areas
A fiber network leveraging utility and gas pipeline rights of way, largely diverse from RCNs fiber network
Diverse major routes from Maine to Virginia for disaster recovery and redundancy
Local and long haul communication solutions for wholesale carrier and enterprise customers
NEON Benefits
Adds to the current suite of NEON services, including:
Network Services
Ethernet (EPL, EVPL, E-LAN)1 Mbps to 1 Gbps (This would be an enhancement to the NEON offering)
IP Transit up to OC192
Construction Services
SONET (similar offering to NEON)
Managed Data Services
Colocation
Shared Web Hosting
Managed Dedicated Servers
Add new locations, which NEON can leverage:
900+ Buildings On-Net
Deeper capillarity in New York City & DC
Adds the Chicago metro market
RBS has significant traction in the enterprise segment and an deep understanding of their needs and requirements
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