DENVER, December 11, 2001- Qwest Communications International Inc. (NYSE:Q), the broadband communications company, today announced it had completed the purchase from Koninklijke KPN N.V., the Dutch telecommunications company, of approximately 14 million shares of KPNQwest N.V. (Nasdaq and AEX: KQIP) for $4.58 per share. Anschutz Company, Qwest?s principal shareowner, also purchased an additional six million KPNQwest shares at the same price.
?Owning a larger stake in KPNQwest is a well-timed strategic opportunity as KPNQwest significantly expands its pan-European leadership position; fully funds its business plan after a major acquisition, and accelerates free cash flow,? said Qwest Chairman and CEO Joseph P. Nacchio, who also serves as chairman of the KPNQwest board.
?The changes in the governance of KPNQwest eliminate a complicated structure that was useful when we set up the joint venture in late 1998,? Nacchio added. ?We expect the new structure will free KPNQwest to respond faster to changing market conditions and accelerate its growth.?
As a result of the share purchase, the KPNQwest supervisory board consists of six members:
- Joseph P. Nacchio (Chairman), Qwest Chairman and CEO
- Drake S. Tempest, Qwest Executive Vice President, Chief Administrative Officer and General Counsel
- Scott A. Berman, Qwest Senior Vice President and Treasurer
- Marten Pieters, KPN member of board of management
- Pierre Everaert, a consultant in corporate governance and President of EC Consulting
- Richard T. Liebhaber, Consulting Managing Director at Veronis, Shuler & Associates
Qwest retains its special rights to approve certain strategic decisions of KPNQwest. KPN?s equivalent special approval rights have been eliminated, but KPN will retain certain minority shareholder protection rights.
The obligations of Qwest and KPN to not compete with KPNQwest in Europe have been terminated. However, if KPN engages in certain competitive activities, KPN?s minority shareholder protection rights will be eliminated, and KPN?s nominee on the KPNQwest supervisory board must be replaced by someone who is not affiliated with KPN.
There are currently approximately 451 million shares of KPNQwest outstanding. As part of the purchase, the voting power of each Class A and B share was reduced from 10 votes per share to one vote per share, which is the same as the voting power of each Class C share. Qwest now holds 214 million Class B shares, or about 47.5% of the voting power, and KPN holds 180 million Class A shares, or about 40% of the voting power.
There are no restrictions on Qwest?s ability to sell its KPNQwest shares, except that KPN has certain ?tag-along? rights if Qwest were to sell any shares. KPN may sell its KPNQwest shares only in underwritten public offerings, in private transactions to institutional purchasers who agree to be subject to the sale restrictions or, beginning in 2003, in market transactions, subject to significant volume limitations. The ?buy-sell? arrangements in the joint venture agreement among the parties will also be eliminated.
Neither Qwest nor KPN has any obligation to make capital contributions to KPNQwest. Qwest will continue to account for its proportionate share of KPNQwest?s profit or loss under the equity method of accounting.
As part of the share purchase transaction, Qwest received an option to purchase some or all of KPN?s shares in KPNQwest in March 2002. Qwest is under no obligation to exercise the option, which is assignable to third parties. Until the option expires, any permitted sale of shares by KPN will be subject to a right of first refusal by Qwest.
Qwest Communications International Inc. (NYSE: Q) is a leader in reliable, scalable and secure broadband data, voice and image communications for businesses and consumers. The Qwest Macro Capacity® Fiber Network, designed with the newest optical networking equipment for speed and efficiency, spans more than 190,000 miles globally. For more information, please visit the Qwest Web site at www.qwest.com.
This release may contain projections and other forward-looking statements that involve risks and uncertainties. These statements may differ materially from actual future events or results. Readers are referred to the documents filed by Qwest Communications International Inc. (together with its affiliates, ?Qwest?, ?we? or ?us?) with the Securities and Exchange Commission, specifically the most recent reports which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements, including but not limited to: potential fluctuations in quarterly results; volatility of Qwest?s stock price; intense competition in the markets in which we compete; changes in demand for our products and services; the duration and extent of the current economic downturn; adverse economic conditions in the markets served by us or by companies in which we have substantial investments; dependence on new product development and acceleration of the deployment of advanced new services, such as broadband data, wireless and video services, which could require substantial expenditure of financial and other resources in excess of contemplated levels; higher than anticipated employee levels, capital expenditures and operating expenses; rapid and significant changes in technology and markets; adverse changes in the regulatory or legislative environment affecting our business, delays in our ability to provide interLATA services within our 14-state local service area; failure to maintain rights-of-way; and failure to achieve the projected synergies and financial results expected to result from the acquisition of U S WEST, and difficulties in combining the operations of the combined company. This release may include analysts? estimates and other information prepared by third parties for which we assume no responsibility. We undertake no obligation to review or confirm analysts? expectations or estimates or to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
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