Nortel Takes Passive Stake in Savvis

Nation's second largest telecom equipment maker gains 6.4 million shares of network provider as repayment of equipment debt.

by dc.internet.com Staff [April 12, 2002]

Nortel Networks Corp. has taken a 6.4 percent passive stake in Savvis Communications according to a Securities and Exchange Commission documents filed Wednesday. Nortel disclosed its stake in a Schedule 13G, but filers aren't required to provide a reason for any changes in stake and aren't required to detail any transactions. Nortel beneficially owned 6.4 million shares of Savvis common stock as of April 3, the filing said.

In January, Savvis Chairman and Chief Executive Rob McCormick said the company was still in default of a credit agreement with Nortel that had an outstanding balance of $85 million.

In April 2001, Savvis defaulted under a $235 million term loan with Nortel because of the bankruptcy filing by Bridge Information Systems Inc., which held a 48 percent Savvis stake at the time and accounted for 81 percent of its 2000 revenue.

Savvis provides access, data transport, and related network services to more than 2,550 medium and large businesses and ISPs. About 75 percent of the company's sales come from Reuters and financial information services company MoneyLine Telerate. Welsh, Carson, Anderson & Stowe owns 56 percent of the Herndon, Va.-based Savvis; while Reuters owns 18 percent.

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