Paul Allen's portfolio just keeps growing. The Microsoft co-founder's Vulcan Ventures said Monday it invested $1.65 billion in telecommunications company RCN Corp. (Nasdaq: RCNC, profile).
The investment, which is in the form of convertible preferred stock, is Allen's latest move to be a high-speed Internet kingpin. Allen's Charter Communications, which is his main cable asset, is on deck to go public in upcoming weeks. Allen has also invested in Go2Net (Nasdaq: GNET, profile).
RCN said in a statement that Allen's preferred stock would be converted into common stock at $62 per share no later than seven years after it is issued.
The latest Vulcan investment would give it a 27.4 percent stake in RCN if the company were to convert all its preferred shares immediately. Vulcan already owns 4.5 percent of RCN. If Vulcan were to convert the preferred stock into common stock immediately, it would receive about 26.6 million shares.
Vulcan will also get two board seats.
RCN and Vulcan also announced Monday a joint venture with the rest of Allen's "Wired World" holdings.
Vulcan formed a joint venture (chart) with Charter Communications, RCN, Go2Net and High Speed Access (Nasdaq: HSAC, profile). The new company, Broadband Partners, will provide broadband portal services initially to customers of Charter and RCN. Vulcan is the majority owner of the joint venture.
The companies said it will be able to deliver broadband services over Charter's digital set-top boxes and PCs.
Go2Net will get distribution for its content and e-commerce platform. The joint venture is an formalizes Allen's investment in Go2Net.
What RCN gets
For RCN, Allen's cash infusion gives it the capital to build out its network by 2003, the company said. It also gives RCN, which operates on the East Coast from Boston to Washington, an avenue to expand into new markets.
Since going public two years ago, RCN has raised $4.6 billion through the debt, equity, bank and private equity markets to build its network. With Allen's investment, RCN will have $3.8 billion in cash and available capital.
RCN said one of its main goals is to expand its customer support infrastructure. The company has ambitious plans to offer phone, cable and high-speed Internet services to residential customers in its markets. RCN also entered into a joint venture with Charter Communications to provide telephony services in Los Angeles.
"At this stage in our development, we have reached a strategic inflection point," said David C. McCourt, CEO of RCN, in a statement. "We have proven that there is demand for high-capacity competitive communications services. To continue to create value for our customers and shareholders, we must focus on network deployment."
Charter Communications IPO on deck
The fun is just beginning for Allen. One of his major holdings, Charter Communications, is slated to go public the first week of November.
Charter, the fourth largest cable company in the U.S., will offer a whopping 170 million shares in a price range of $17 to $19.
Goldman Sachs is the lead underwriter for the Charter IPO.