NEW HAVEN, Conn. -- Oct. 7, 2004 -- DSL.net, Inc. (AMEX: BIZ), a leading nationwide provider of broadband communications services to businesses, today announced that it has completed a $5.0 million financing with Laurus Master Fund, Ltd. ("Laurus Funds"), a New York City-based institutional fund that specializes in providing financing to growing, small-cap companies.
The financing consists of a $4.25 million two-year convertible term note and a $750,000 revolving credit facility. This indebtedness bears an annual interest rate of between 6% and 7% that decreases as the market price of DSL.net's common stock increases. The note and credit facility are convertible, at the option of the holders, into DSL.net common stock at a conversion price of $0.28 per share. In conjunction with the financing, the Company issued warrants to Laurus Funds for the purchase of approximately 1.14 million shares of DSL.net common stock at an exercise price of $0.35 per share.
"We intend to use these funds to pursue strategic opportunities, including subscriber-line acquisitions and other corporate transactions," said Kirby G. "Buddy" Pickle, chief executive officer of DSL.net. "It also represents the successful completion of a third important strategic goal that we set our sights on earlier in the year. These included simplifying the Company's capital structure through the conversion of our Series X preferred stock, obtaining a listing for our common stock on the American Stock Exchange and securing financing to pursue strategic opportunities."
The financing is secured by certain of the Company's accounts receivable. In exchange for the subordination of a prior lien on these accounts receivable, the Company issued warrants to its senior secured noteholders to purchase approximately 19.2 million shares of DSL.net common stock. These warrants are exercisable only upon stockholder approval and solely in the event of a qualifying change of control of the Company, at an exercise price equal to the per-share transaction value of the Company's common stock. The use of the financing proceeds is subject to approval of representatives of the Company's senior secured noteholders.
About DSL.net
DSL.net, Inc. is a leading nationwide provider of broadband communications services to businesses. The Company combines its own facilities, nationwide network infrastructure and Internet Service Provider (ISP) capabilities to provide high-speed Internet access, private network solutions and value-added services directly to small- and medium-sized businesses or larger enterprises looking to connect multiple locations. DSL.net product offerings include T-1, DS-3 and business-class DSL services, virtual private networks (VPNs), frame relay, Web hosting, DNS management, enhanced e-mail, online data backup and recovery services, firewalls and nationwide dial-up services, as well as integrated voice and data offerings in select markets. For more information, visit www.dsl.net, e-mail info@dsl.net, or call 1-877-DSL-NET1 (1-877-375-6381).
