Japan's Crosswave Files for Nasdaq IPO

TOKYO (07/11/2000) - Crosswave Communications Corp. (CWC), a domestic Japanese data backbone operator, said Tuesday it plans to conduct an IPO (initial public offering) on the Nasdaq stock exchange in the U.S.

The company, which is currently a joint venture between Sony Corp., Toyota Motor Corp. and Internet Initiative Japan Inc. (IIJ), plans to offer around 20 percent of the company in an IPO that stands to bring in between US$275 million and $322 million.

Formed in 1998, Crosswave is Japan's first, and still its only, example of a next-generation carrier. The company's network is based largely on fiber leased on a long term basis from KDD Corp., a much larger conventional carrier. By taking 10-year leases on fibers and employing DWDM (dense wavelength division multiplexing) bandwidth boosting technology, the company is able to offer high-capacity circuits at prices well below those of other carriers.

In the offer, the timing of which has not been decided, CWC said it plans to offer 17.4 million American depository shares (ADS) for between $12 and $14 each. At those prices, the company stands to gain between $208.7 million and $243.5 million from the listing. A further 2.6 million ADSs will also be available should the issue be oversubscribed. At the same time, IIJ will buy an additional 15,000 new shares of common stock, equivalent to 3 million ADSs, in a private placement that could bring in an extra $36 million to $42 million.

Following the IPO, IIJ will remain the largest single shareholder in the company. It currently owns 40 percent of Crosswave, with Sony and Toyota each holding 30 percent. Post-IPO, and assuming the overallotment option is exercised in full, IIJ's shareholding will be reduced to 33.98 percent, while that of its two partners will be reduced to 23.3 percent.

The company plans to use the money raised from the offering to begin building its own network. "We are working on deploying new lines as part of a Ministry of Construction project that allows us to lay fiber along major roads," said Crosswave spokeswoman Junko Higasa. "We will deploy more fibers and also plan to get into the local access market."

In choosing to list in the U.S. before a local listing, the company follows the lead of IIJ, which raised $165 million from an IPO on the Nasdaq in August last year.

"In the U.S. market there are examples of new generation network infrastructure operators such as Qwest," Higasa said, explaining the company's decision to list in the U.S. ahead of Japan. "The Nasdaq market has a better understanding of new generation networks so we believe it is a better environment for our company."

Crosswave Communications Corp., in Tokyo, can be contacted at +81-3-5205-4500 or found online at http://www.cwc.co.jp/.

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