Pihana announces three-way merger
By Frank Cho
Advertiser Staff Writer
Honolulu-based Pihana Pacific Inc. said yesterday it is merging with Equinix Inc., which provides data centers for Internet companies' server computers, and Singapore Technologies Telemedia Pte., a Singapore government-financed venture capital fund.
Under the agreement, Pihana will merge its Asia-Pacific exchange center operations into Equinix, and Singapore Technologies will become the largest "strategic" shareholder in the publicly traded Equinix.
In return, Equinix gains the assets of i-STT, Singapore Technologies' Internet infrastructure services unit, and Pihana shareholders will receive stock in Equinix.
"When you look at Pihana, you got a very strong data center across five countries. The No. 1 problem Pihana has had in the past has been its financial credibility," said Richard Kalbrener, Pihana's president and chief executive officer. "So now people will look at us and say we are very financially strong, mainly because of the backing of i-SST."
Kalbrener said the deal could lead to layoffs at Pihana, which employs 160 workers at seven data centers around the Pacific, including 58 workers in Honolulu.
"So far, this has been only a financial transaction. Transition teams will be getting together over the next few weeks, and we plan to keep only the best from each of the three companies," Kalbrener said.
As part of the deal, Singapore Technologies has agreed to invest $30 million in the new company, which in part will go to retire debt.
Equinix will use $23 million of the proceeds to retire part of its $130 million in debt, including about 80 percent of its senior notes, the California-based company said in a statement.
The addition of the businesses gives Equinix more than 400 customers, including AT&T Corp., Goldman Sachs, Electronic Arts Inc. and International Business Machines Corp. The company is also looking at expanding its operations to China.
Pihana Pacific raised $240 million in venture capital in 2000, spending much of it to build out its data center network in Asia. It also maintains a data center near the Honolulu Airport.
Bloomberg News contributed to this report.
