April 14, 2004 Falls Church, VA, and Redmond, WA --Wireless systems providers YDI Wireless Inc. and Terabeam Corp. have announced the signing of a definitive merger agreement. Per the agreement, Terabeam will become a wholly owned subsidiary of YDI and will remain focused on providing high capacity wireless systems to telecommunications carriers.
YDI delivers point-to-point and point-to-multipoint microwave radio systems as well as high capacity point-to-point millimeter wave (MMW) systems. Terabeam provides broadband wireless systems using high frequency MMW and free space optics (FSO) technologies.
Under the terms of the agreement, each share of Terabeam's common stock will be exchanged for 0.22 shares of YDI's common stock. This ratio would be reduced to 0.20 shares of YDI's common stock for each Terabeam share if YDI's average stock price before closing is higher than $5.40. If all Terabeam options and warrants that have exercise prices (as adjusted by the exchange ratio) below YDI's current stock price are exercised prior to closing, YDI stockholders would own approximately 53% of the combined entity and Terabeam stockholders would own approximately 47% using the 0.22 exchange ratio. The relative ownership percentages will change if fewer Terabeam options and warrants are exercised prior to closing.
As of March 31, 2004, Terabeam had cash, cash equivalents, and restricted cash of $60.3 million, total assets of $74.3 million, total liabilities of $14.2 million, and stockholders' equity of $60.1 million. These numbers are based on Terabeam's unaudited March 31, 2004 balance sheet. Some of Terabeam's cash on hand will be used to pay expenses, currently anticipated to be in excess of $6 million and which may be significantly higher, incurred in connection with the contemplated transaction and related restructuring.
YDI's common stock is currently traded on the OTC Bulletin Board under the symbol "YDIW." YDI had previously applied to The Nasdaq Stock Market, Inc. to have its common stock listed on the Nasdaq SmallCap Market. The Nasdaq Stock Market had approved that application. YDI postponed the listing of its stock on the Nasdaq SmallCap Market given the pendency of this transaction with Terabeam and the possibility that completion of this transaction would allow YDI's common stock to be listed immediately on the Nasdaq National Market. YDI expects to pursue the listing of its common stock on the Nasdaq National Market or the Nasdaq SmallCap Market after the closing of this transaction.
Robert Fitzgerald will be the CEO of the combined company; in general, the combined company will be managed by the current YDI management team. The board of directors of the combined company will consist of four YDI designees and three Terabeam designees, including Dan Hesse, Terabeam's chairman and CEO.
"Not only will we consolidate the two companies' 60-GHz MMW product lines into what we believe will make us a world leader in the production of 'E-Band' (60-90 GHz) wireless systems," contends Robert Fitzgerald, CEO of YDI, "but by combining our diverse license-free product lines into a larger product portfolio, the new company will have a more complete set of solutions to meet our customers' varying capacity, range, security, and cost requirements. Additional synergies should be gained by combining YDI's WISP, municipal, and enterprise sales channels with Terabeam's telecom carrier and government sales activities," he adds.