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Mobile

Verio adds to war chest

The Internet service provider raises $150 million though debt financing to continue its U.S. expansion.

    Internet service provider Verio today said it raised $150 million though debt financing to continue its U.S. expansion.

    The company sold $150 million in warrants for common stock and senior unsecured notes maturing in 2004. The transaction was underwritten by Merrill Lynch and Lazard Freres, and was placed with a number of institutional investors.

    Company spokesman Steven Silvers said the timing was right to go forward with additional financing.

    "The company has shown good solid growth and the investment community has shown support for the company in its efforts to build a national Internet service provider," he said.

    This offering raises Verio's total equity and debt financing to $250 million. The company is aiming to build a new national network that combines the strength of a high-speed backbone with the service of prominent local and regional Internet providers in major markets across the country.

    Last month, Verio brought its investments to $100 million, announcing a $20 million investment from Norwest Venture Capital.

    Verio currently holds at least a 20 percent stake in 19 service providers.

    "Eventually every affiliate will be 100 percent-owned by Verio," added Silvers.

    And that is where this round of financing comes into play. Verio will use the net proceeds to finance the company's ongoing operations as well as make continuing investments in Internet provider affiliates.

    Verio will also use a portion of the proceeds from this current financing to continue adding Internet providers to establish a presence in every major U.S. market. As of last month, Verio had committed about half its capital.

    Because this debt financing was privately placed, investors will remain undisclosed.