Pihana Pacific enters Honolulu-based Internet data storage firm Pihana Pacific said yesterday it has entered into a three-way merger with Equinix Inc. and Singapore Technologies Telemedia Pte Ltd.
multinational merger
The Honolulu data storage
company will combine with
Equinix and ST TelemediaBy Alan Vaughn
avaughn@starbulletin.comAs part of the merger, data center firm Equinix will acquire Pihana's Asia-Pacific and U.S. Internet exchange centers as well as those of i-STT, a subsidiary of ST Telemedia. The deal is expected to close this year.
Essentially, all three companies are combining their assets under Equinix.
"It's also a way for i-STT and Pihana to become public companies," said Rich Kalbrener, president and chief executive officer of Pihana.
In addition, ST Telemedia, through a subsidiary, will invest $30 million in Equinix. Pihana Pacific shareholders will also make additional investment before the deal closes, Kalbrener said.
Equinix will use $23 million of ST Telemedia's investment to retire part of its $130 million in debt, including about 80 percent of its senior notes, the company said.
Equinix, which trades on the Nasdaq Stock Market under the symbol EQIX, closed down 6 cents today at 30 cents. Its stock is down 89.7 percent this year.
Pihana Pacific gained attention in 2000 when it attracted $240 million in financing and built seven regional data centers throughout the Pacific Rim, in Los Angeles, Seoul, Hong Kong, Singapore, Australia and Tokyo, as well as Honolulu. The company, however, had trouble attracting sales to the centers, and last year fired 12 percent of its work force.
Pihana Pacific employs 160 employees worldwide, including 58 in Honolulu. Staff could be cut or relocated, Kalbrener said. "It's been, up to now, a financial transaction and now the three companies have to sit down," he said.
While the Honolulu data center will remain open, some or all of the company's headquarters and back office staff could be affected, he said, since i-STT's headquarters are in Singapore and Equinix's are in Mountain View, Calif.
"We're concerned that we're going to lose quite a few positions in Hawaii," he said.
The centers essentially house computer servers for Internet companies.
Pihana was tainted by the collapse of debt-ridden competitors such as Exodus Communications and PSINet.
Pihana was debt-free, Kalbrener said, but had trouble convincing customers of its longevity.
"We had a credibility problem with whether we would be around in a year or two," he said. "We feel we've solved that problem."
Occupancy at the company's centers has risen, Kalbrener said. The Honolulu center is 40 percent to 50 percent occupied, while centers in Hong Kong and Sydney, Australia, are about 30 percent full.
After the merger, ST Telemedia will become the single largest outside shareholder of Equinix, with 28 percent. Current Equinix shareholders will own 33 percent, Pihana Pacific shareholders will own 21 percent. Owners of senior debt notes will own 18 percent.
All told, the combined company will have more than 400 customers, including AT&T, IBM and Yahoo, and will operate more than 1 million square feet of Internet data center operations.