CityNet Raises $275 Million for Building Last-Mile Fiber Optic Networks; Broadband Infrastructure Company Closes Second Round Funding

Apr 10, 2001, 01:00 ET from CityNet Telecommunications, Inc.

    SILVER SPRING, Md., April 10 /PRNewswire/ -- CityNet Telecommunications,
 Inc., the leader in last-mile broadband infrastructure, today announced that
 it has closed a second round of equity worth $175 million, with an additional
 $100 million in debt financing.
     The Carlyle Group leads the group of five premier investment funds,
 including Berkshire Partners, Trimaran Capital Partners, Great Hill Partners
 and Fay Richwhite. CityNet's first round of investment was $100 million in
 April 2000, and included investments by Telecom Partners, Crescendo Ventures
 and CIBC Capital Partners.
     Founded in 1999, CityNet deploys last-mile fiber optic networks through a
 city's existing sewer system, avoiding many of the problems associated with
 traditional trenching construction. CityNet installs fiber networks and then
 leases them to telecommunications companies, Internet and network service
 providers and others that offer high-speed services. CityNet is the first
 broadband infrastructure company to deliver this last-mile dark fiber solution
 on a wholesale basis.
     "We are privileged and honored to have these five new partners join our
 pioneering efforts in building what is considered the last -- but critically
 important -- piece of fiber optic network infrastructure -- the last-mile,"
 said Robert G. Berger, CityNet's Chairman and Chief Executive Officer. "This
 new investment fully funds CityNet's build-out plans, and demonstrates a
 strong confidence in our company and its sole focus on bringing fiber optic
 connectivity directly into buildings."
     Bruce Rosenblum, Managing Director of The Carlyle Group said: "We're
 delighted to be part of a truly innovative company, with a first-class
 management team and strong financial backing by some of the leading funds in
 the telecom business. From day-one, CityNet impressed us with their vision,
 business plan and dedicated focus on filling a critical need in the broadband
 infrastructure market," Rosenblum said.
     The last-mile is the gap in the all-fiber optic broadband network --
 currently occupied by older and slower copper wires -- between end-user
 buildings and the much larger "beltway" fiber optic networks that circle
 around and through cities. Bridging this last mile gap has been a major
 obstacle to the fast and cost-effective deployment of broadband service.
 CityNet's mission is to begin unclogging the copper bottleneck by replacing it
 with the gold standard of broadband communications mediums: fiber optics.
     "The Carlyle Group and our other investors have all been financial leaders
 when it comes to investing in telecommunications and broadband companies,"
 said Debra Hoopes, CityNet's SVP & Chief Financial Officer. "They understand
 that our last-mile focus is unique and that the market opportunity is
 tremendous."
     Experts agree that one of the greatest obstacles to the rapid deployment
 of broadband Internet, voice and data services is the need to rip-up streets
 to lay fiber optic cable, a critical problem in cities around the world.
 CityNet is able to avoid the problems associated with trenching, by deploying
 its last-mile fiber optic networks through a city's sewer pipes using SAM(sm),
 CityNet's leading-edge computer-controlled robot. CityNet's exclusive partner
 Ka-Te Systems AG of Zurich, Switzerland manufactures the robots.
     CityNet uses another patented, fiber deployment technology, for larger,
 man-accessible sewer pipes, made by its exclusive partner CableRunner North
 America LLC, a subsidiary of the Vienna, Austria Water & Sewer Agency. The
 company's other last-mile partners include Alcatel, a global leader in fiber
 optics, telecommunications and networking, which provides the fiber cables,
 special conduit and other connectivity solutions; and Carter & Burgess, one of
 the premier architecture, engineering, and construction management firms in
 the U.S., that helps CityNet manage the design and construction of its
 networks.
     CityNet has already signed landmark license and access agreements with
 three cities -- Indianapolis, IN, Albuquerque, NM and Omaha, NE. The company
 has just signed an agreement with its first European city, which it will be
 officially announcing within the next few weeks. CityNet is negotiating
 similar agreements with approximately 28 other U.S. and European cities.
 
     ABOUT CITYNET
     Founded in 1999, CityNet is a leading broadband infrastructure company
 that builds carrier-class last-mile fiber optic networks. The company uses a
 revolutionary but proven in-sewer deployment method to build its networks in
 cities across the U.S. and internationally. As a wholesale carrier's carrier,
 CityNet provides telecom carriers and network service provider customers with
 all-optical high-speed connections directly into commercial and residential
 multi-tenant buildings, thereby Bridging the Last-Mile Divide(SM) that exists
 for these carrier customers and, ultimately, end-users of broadband services.
 For more information on CityNet, visit http://www.citynettelecom.com .
 
     ABOUT THE CARLYLE GROUP
     The Carlyle Group is a Washington, D.C. based global private equity firm
 with over $12 billion of capital under management. The firm conducts its
 investment activities through focused industry groups, including:
 Communications, Aerospace & Defense, Information Technology, Healthcare, and
 Real Estate. Since 1987, The Carlyle Group has invested over $5.8 billion of
 equity in transactions with an aggregate acquisition value of over $16
 billion. For more information, visit http://www.thecarlylegroup.com .
 
     ABOUT BERKSHIRE PARTNERS
     Berkshire Partners is an active investor in the private equity market
 managing $1.8 billion of capital. Through its 15-year investment history,
 Berkshire has completed 70 acquisitions or growth capital investments with a
 primary focus on building solid, growth-oriented companies in conjunction with
 strong, equity-incented management teams. For more information, visit
 http://www.berkshirepartners.com .
 
     ABOUT TRIMARAN CAPITAL PARTNERS
     Trimaran Capital Partners is a New York based investment firm that manages
 over $4 billion in assets. Previous investments by Trimaran Fund II, its $1
 billion private equity vehicle, and its predecessor fund include Global
 Crossing, SEAT Pagine Gialle, SpectraSite Holdings, Telebanc Financial
 Corporation, Petersen Publishing, IASIS Healthcare & Village Voice Media.
 
     ABOUT GREAT HILL PARTNERS
     Great Hill Partners is a leading Boston-based investment firm that
 provides equity financing and strategic guidance to data communications, IT
 infrastructure, telecommunications, media, information, education and business
 service companies. Recent investments include CityNet, Interelate,
 K-Solutions, ManagedStorage International (MSI), ManagedOps.com, Dame
 Broadcasting, Edge Connections, High-Tech Institute, SmartMail, DURO
 Communications and Horizon Telecom International. The firm has over $1 billion
 in capital under management from institutional investors including leading
 commercial and investment banks, state and corporate pension funds, university
 endowments and private trusts.  For more information, visit
 http://www.greathillpartners.com .
 
     ABOUT FAY RICHWHITE
     Fay Richwhite is a private equity firm based in Geneva, Switzerland.
 During the last decade, Fay Richwhite has actively invested over $1 billion in
 companies in Australasia, USA and Europe. Previous investments include the
 privatization of New Zealand Telecom with Ameritech and Bell Atlantic. Fay
 Richwhite has a joint venture with Berkshire Partners to pursue European
 investment opportunities.
 
     ABOUT TELECOM PARTNERS
     Telecom Partners III, L.P., a $500 million venture capital fund, focused
 on start-up and early stage investments in communications service providers
 operating in the areas of broadband last mile networks, internet applications,
 and wireless networks in both domestic and international markets. TP
 anticipates demand changes in the communications industry and starts new
 businesses on its own or with other value-added investors to capitalize on
 these demand changes. They invest in companies where they can be actively
 involved in influencing corporate operating strategies, building management
 teams and supporting future capital raising efforts. Telecom Partners focuses
 on building large-scale enterprises that each have the potential to achieve an
 exit value equal to the fund's total commitments. The focus and investment
 strategies of Telecom Partners continue to capitalize on the increasing demand
 for high speed access and unique services in the communications industry. For
 additional information on Telecom Partners, please visit
 http://www.telecompartners.com .
 
     ABOUT CRESCENDO VENTURES
     Crescendo Ventures is a global venture capital firm that accelerates the
 growth of companies by providing seed and early-stage funding in
 communications and Internet infrastructure. A new breed of venture capital
 firm, Crescendo Ventures collaborates with and supports entrepreneurs, using
 its industry expertise and personal approach to nurture promising ideas and
 companies to their full potential. Founded in 1993, Crescendo Ventures manages
 more than $1 billion from its headquarters in Palo Alto, California and
 offices in Minneapolis and London. For additional information on Crescendo
 Ventures or their portfolio, please visit http://www.crescendoventures.com .
 
     ABOUT CIBC CAPITAL PARTNERS
     CIBC Capital Partners is a leading North American merchant bank and part
 of CIBC World Markets, Canadian Imperial Bank of Commerce's investment bank.
 CIBC Capital Partners is invested in over 200 companies and in approximately
 100 private equity funds around the world, with total commitments in excess of
 $5 billion. CIBC Capital Partners' merchant banking activities include private
 equity investments in venture capital, leveraged buyouts, and other special
 situations. CIBC Capital Partners venture capital investments are primarily
 focused on the telecommunications, technology, and healthcare industries.
 Merchant banking professionals are located in New York, Menlo Park, and
 Toronto. Canadian Imperial Bank of Commerce is one of the largest banks in
 North America with significant retail, electronic banking and investment
 banking operations. For additional information on CIBC Capital Partners,
 please visit http://www.cibcwm.com .
 
 

SOURCE CityNet Telecommunications, Inc.
    SILVER SPRING, Md., April 10 /PRNewswire/ -- CityNet Telecommunications,
 Inc., the leader in last-mile broadband infrastructure, today announced that
 it has closed a second round of equity worth $175 million, with an additional
 $100 million in debt financing.
     The Carlyle Group leads the group of five premier investment funds,
 including Berkshire Partners, Trimaran Capital Partners, Great Hill Partners
 and Fay Richwhite. CityNet's first round of investment was $100 million in
 April 2000, and included investments by Telecom Partners, Crescendo Ventures
 and CIBC Capital Partners.
     Founded in 1999, CityNet deploys last-mile fiber optic networks through a
 city's existing sewer system, avoiding many of the problems associated with
 traditional trenching construction. CityNet installs fiber networks and then
 leases them to telecommunications companies, Internet and network service
 providers and others that offer high-speed services. CityNet is the first
 broadband infrastructure company to deliver this last-mile dark fiber solution
 on a wholesale basis.
     "We are privileged and honored to have these five new partners join our
 pioneering efforts in building what is considered the last -- but critically
 important -- piece of fiber optic network infrastructure -- the last-mile,"
 said Robert G. Berger, CityNet's Chairman and Chief Executive Officer. "This
 new investment fully funds CityNet's build-out plans, and demonstrates a
 strong confidence in our company and its sole focus on bringing fiber optic
 connectivity directly into buildings."
     Bruce Rosenblum, Managing Director of The Carlyle Group said: "We're
 delighted to be part of a truly innovative company, with a first-class
 management team and strong financial backing by some of the leading funds in
 the telecom business. From day-one, CityNet impressed us with their vision,
 business plan and dedicated focus on filling a critical need in the broadband
 infrastructure market," Rosenblum said.
     The last-mile is the gap in the all-fiber optic broadband network --
 currently occupied by older and slower copper wires -- between end-user
 buildings and the much larger "beltway" fiber optic networks that circle
 around and through cities. Bridging this last mile gap has been a major
 obstacle to the fast and cost-effective deployment of broadband service.
 CityNet's mission is to begin unclogging the copper bottleneck by replacing it
 with the gold standard of broadband communications mediums: fiber optics.
     "The Carlyle Group and our other investors have all been financial leaders
 when it comes to investing in telecommunications and broadband companies,"
 said Debra Hoopes, CityNet's SVP & Chief Financial Officer. "They understand
 that our last-mile focus is unique and that the market opportunity is
 tremendous."
     Experts agree that one of the greatest obstacles to the rapid deployment
 of broadband Internet, voice and data services is the need to rip-up streets
 to lay fiber optic cable, a critical problem in cities around the world.
 CityNet is able to avoid the problems associated with trenching, by deploying
 its last-mile fiber optic networks through a city's sewer pipes using SAM(sm),
 CityNet's leading-edge computer-controlled robot. CityNet's exclusive partner
 Ka-Te Systems AG of Zurich, Switzerland manufactures the robots.
     CityNet uses another patented, fiber deployment technology, for larger,
 man-accessible sewer pipes, made by its exclusive partner CableRunner North
 America LLC, a subsidiary of the Vienna, Austria Water & Sewer Agency. The
 company's other last-mile partners include Alcatel, a global leader in fiber
 optics, telecommunications and networking, which provides the fiber cables,
 special conduit and other connectivity solutions; and Carter & Burgess, one of
 the premier architecture, engineering, and construction management firms in
 the U.S., that helps CityNet manage the design and construction of its
 networks.
     CityNet has already signed landmark license and access agreements with
 three cities -- Indianapolis, IN, Albuquerque, NM and Omaha, NE. The company
 has just signed an agreement with its first European city, which it will be
 officially announcing within the next few weeks. CityNet is negotiating
 similar agreements with approximately 28 other U.S. and European cities.
 
     ABOUT CITYNET
     Founded in 1999, CityNet is a leading broadband infrastructure company
 that builds carrier-class last-mile fiber optic networks. The company uses a
 revolutionary but proven in-sewer deployment method to build its networks in
 cities across the U.S. and internationally. As a wholesale carrier's carrier,
 CityNet provides telecom carriers and network service provider customers with
 all-optical high-speed connections directly into commercial and residential
 multi-tenant buildings, thereby Bridging the Last-Mile Divide(SM) that exists
 for these carrier customers and, ultimately, end-users of broadband services.
 For more information on CityNet, visit http://www.citynettelecom.com .
 
     ABOUT THE CARLYLE GROUP
     The Carlyle Group is a Washington, D.C. based global private equity firm
 with over $12 billion of capital under management. The firm conducts its
 investment activities through focused industry groups, including:
 Communications, Aerospace & Defense, Information Technology, Healthcare, and
 Real Estate. Since 1987, The Carlyle Group has invested over $5.8 billion of
 equity in transactions with an aggregate acquisition value of over $16
 billion. For more information, visit http://www.thecarlylegroup.com .
 
     ABOUT BERKSHIRE PARTNERS
     Berkshire Partners is an active investor in the private equity market
 managing $1.8 billion of capital. Through its 15-year investment history,
 Berkshire has completed 70 acquisitions or growth capital investments with a
 primary focus on building solid, growth-oriented companies in conjunction with
 strong, equity-incented management teams. For more information, visit
 http://www.berkshirepartners.com .
 
     ABOUT TRIMARAN CAPITAL PARTNERS
     Trimaran Capital Partners is a New York based investment firm that manages
 over $4 billion in assets. Previous investments by Trimaran Fund II, its $1
 billion private equity vehicle, and its predecessor fund include Global
 Crossing, SEAT Pagine Gialle, SpectraSite Holdings, Telebanc Financial
 Corporation, Petersen Publishing, IASIS Healthcare & Village Voice Media.
 
     ABOUT GREAT HILL PARTNERS
     Great Hill Partners is a leading Boston-based investment firm that
 provides equity financing and strategic guidance to data communications, IT
 infrastructure, telecommunications, media, information, education and business
 service companies. Recent investments include CityNet, Interelate,
 K-Solutions, ManagedStorage International (MSI), ManagedOps.com, Dame
 Broadcasting, Edge Connections, High-Tech Institute, SmartMail, DURO
 Communications and Horizon Telecom International. The firm has over $1 billion
 in capital under management from institutional investors including leading
 commercial and investment banks, state and corporate pension funds, university
 endowments and private trusts.  For more information, visit
 http://www.greathillpartners.com .
 
     ABOUT FAY RICHWHITE
     Fay Richwhite is a private equity firm based in Geneva, Switzerland.
 During the last decade, Fay Richwhite has actively invested over $1 billion in
 companies in Australasia, USA and Europe. Previous investments include the
 privatization of New Zealand Telecom with Ameritech and Bell Atlantic. Fay
 Richwhite has a joint venture with Berkshire Partners to pursue European
 investment opportunities.
 
     ABOUT TELECOM PARTNERS
     Telecom Partners III, L.P., a $500 million venture capital fund, focused
 on start-up and early stage investments in communications service providers
 operating in the areas of broadband last mile networks, internet applications,
 and wireless networks in both domestic and international markets. TP
 anticipates demand changes in the communications industry and starts new
 businesses on its own or with other value-added investors to capitalize on
 these demand changes. They invest in companies where they can be actively
 involved in influencing corporate operating strategies, building management
 teams and supporting future capital raising efforts. Telecom Partners focuses
 on building large-scale enterprises that each have the potential to achieve an
 exit value equal to the fund's total commitments. The focus and investment
 strategies of Telecom Partners continue to capitalize on the increasing demand
 for high speed access and unique services in the communications industry. For
 additional information on Telecom Partners, please visit
 http://www.telecompartners.com .
 
     ABOUT CRESCENDO VENTURES
     Crescendo Ventures is a global venture capital firm that accelerates the
 growth of companies by providing seed and early-stage funding in
 communications and Internet infrastructure. A new breed of venture capital
 firm, Crescendo Ventures collaborates with and supports entrepreneurs, using
 its industry expertise and personal approach to nurture promising ideas and
 companies to their full potential. Founded in 1993, Crescendo Ventures manages
 more than $1 billion from its headquarters in Palo Alto, California and
 offices in Minneapolis and London. For additional information on Crescendo
 Ventures or their portfolio, please visit http://www.crescendoventures.com .
 
     ABOUT CIBC CAPITAL PARTNERS
     CIBC Capital Partners is a leading North American merchant bank and part
 of CIBC World Markets, Canadian Imperial Bank of Commerce's investment bank.
 CIBC Capital Partners is invested in over 200 companies and in approximately
 100 private equity funds around the world, with total commitments in excess of
 $5 billion. CIBC Capital Partners' merchant banking activities include private
 equity investments in venture capital, leveraged buyouts, and other special
 situations. CIBC Capital Partners venture capital investments are primarily
 focused on the telecommunications, technology, and healthcare industries.
 Merchant banking professionals are located in New York, Menlo Park, and
 Toronto. Canadian Imperial Bank of Commerce is one of the largest banks in
 North America with significant retail, electronic banking and investment
 banking operations. For additional information on CIBC Capital Partners,
 please visit http://www.cibcwm.com .
 
 SOURCE  CityNet Telecommunications, Inc.