Cashed-up Primus on ISP purchase path

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Cashed-up Primus on ISP purchase path

Primus Telecommunications is hitting the ISP acquisition trial with renewed vigour, believing the impending restructure of its US holding company will free up to 25 per cent of local profits.

Speaking to iTnews, chief executive Ravi Bhatia said the news of the restructure would likely be good news for the local operations.

He said that "a large portion of local profits" that were previously used in part to service Primus' US holding company's debt may now be available for investment in organic expansion as well as acquisitions in Australia.

Bhatia said the portion of local profit shifting up to the US is "probably half" but it is calculated month-to-month.

"We're very profitable in Australia," Bhatia said.

"We did $130 million gross and had an EBITDA of over $30 million last year. A significant part of that went to the US."

Bhatia said that it would use its freed up cash position to recommence negotiations with several ISPs, particularly those in some financial trouble.

"The thing is there are distressed assets out there," Bhatia said. "We have the cash to buy them.

"We're talking to a couple of ISPs with 20 to 25,000 plus customers but we had to slow down negotiations because of everything that was going on [with the holding company]. Now that's behind us we can move on."

Bhatia said that while Primus had strong presence in Victoria, New South Wales and Western Australia, it wouldn't target other states in particular as part of its acquisition strategy.

"We have some presence in Queensland but need to dent it some more," Bhatia said.

"But actually it really doesn't matter where the ISPs are with the exception of the Northern Territory, because we don't have much infrastructure there and the backhaul transportation is too expensive."

Yesterday, Primus said that its US holding company, Primus Telecommunications Group, Incorporated together with three affiliated holding companies had reached an agreement with various noteholders on the terms of a consensual financial restructuring of their debt.

The agreement is expected to be consummated through an expedited Chapter 11 filing in the United States, and will result in the reduction of more than 50 per cent in principal debt obligations and interest payments for the US holding company.

Employees, customers, suppliers or business partners in Australia are unaffected by the move.

"There will be no loss jobs in Australia," he said.

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