Istar Internet Inc. will be a wholly-owned subsidiary of PSINet Canada a little earlier than expected, thanks to a new cash-only buy-out plan offered by PSINet Wednesday.
In November, PSINet offered to pay iStar shareholders the equivalent of $35 million in PSINet stock.
PSINet has offered to pay $21.8 million cash to buy iStar outright in an effort to inject some much-needed cash into the floundering Internet service provider.
The cash-only deal will close much more quickly than a stock-swap, said PSINet Canada CEO Nadir Desai. Expediting the takeover will make it a much smoother process.
"By being able to close the deal right away, we can effectively not lose customers and not lose employees, who were wondering what was going on", Desai said in an interview Wednesday.
The changed terms have nothing to do with iStar's previous network access agreement with Bell Canada, Desai said.
"No that wasn't a hold up," Nadir Desai said in an interview Wednesday. "We're hoping that everyone will be happy with this."
In August, Bell allowed iStar to defer $20 million in network access charges. Analysts had seen the agreement as a possible barrier to the PSINet takeover.
The deal is expected to close by the end of January, a full month earlier than the stock swap deal could have closed.
Istar will continue to serve its consumer customers while PSINet will serve all its corporate customers, Desai said.
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