Blackstone Group and Chase Capital Partners Lead Group of Investors
NEW YORK–August 21, 2000–FrontLine Capital Group (NASDAQ: FLCG), a leading developer of e-commerce and e-service companies that empower small to medium size enterprises (SMEs), entrepreneurs, and the mobile workforce, today announced the placement of $125 million of Senior Subordinated Notes by HQ Global Workplaces (“HQ”), a FrontLine Partner Company. These notes replace a $125 million senior subordinated bridge facility obtained from UBS Warburg in connection with the HQ/VANTAS merger completed on June 1, 2000. The Senior Subordinated Notes accrue interest at 13.5% and are due August 2007. A group of investors led by Blackstone Mezzanine Partners L.P. (an affiliate of The Blackstone Group), and Chase Capital Partners purchased the notes.
In connection with the merger, FrontLine arranged for an infusion of $195 million of third party convertible preferred equity into HQ from a group of prominent investors, including Equity Office Properties Trust, Fortress Investment Fund LLC, Stichting Pensioenfonds ABP, AEW Capital Management, CIBC Capital Partners, First Union Real Estate Equity and Mortgage Investments, BNP Paribas, and Blackacre Capital Management. To finance the merger, HQ utilized a $225 million senior term loan with a $50 million revolving line of credit from a syndicate co-led by BNP Paribas, Deutsche Bank, and Citibank, with ING Barings as a lead participant as well as secure the $125 million senior subordinated bridge loan from UBS Warburg.
“We are extremely pleased FrontLine was able to attract such a high caliber group of investors who share our belief in our business plan, objectives and Partner Companies,” said Michael Maturo, Chief Financial Officer of FrontLine. “This financing is an example of Frontline’s and its Partner Companies’ ability to attract capital from some of the most prestigious financial institutions.”
About FrontLine Capital Group
FrontLine Capital Group (NASDAQ: FLCG) is a publicly-traded Internet-related operating company that identifies, acquires interests in, develops and manages a network of B2B e-commerce and e-services companies that service small and medium-size enterprises and the mobile workforces of larger companies. FrontLine generally acquires significant interests in companies to influence their long-term direction and value creation and has committed $390 million in 12 companies, including HQ Global Workplaces, OnSite Access, EmployeeMatters, RealtyIQ.com, and UpShot.com. To maximize the potential of its Companies, FrontLine provides them with operational support and strategic guidance through its internal management resources, advisory board, and proprietary business development resources.
FrontLine also actively works with its companies to foster a collaborative environment and facilitate strategic relationships that provide access to the resources and customer base of its entire network. For more information about FrontLine Capital Group, please visit www.FrontLineCapital.com.
About HQ Global
Dallas-based HQ Global Workplaces is the world’s largest provider of flexible turn-key officing solutions with a global network of 469 locations in 17 countries. HQ Global Workplaces focuses on full-time clients, those who need occasional access to office space and business services, and home-based clients. The company provides an extensive offering of high-quality private offices, meeting rooms, flexible on-demand workspaces, state-of-the-art technology, personalized telephone answering services, on-site technical assistance and additional business support services. All locations offer attractive environments designed to encourage efficiency, productivity, and comfort. For more information about HQ Global Workplaces, please visit www.hq.com.
About The Blackstone Group
The Blackstone Group, a private investment bank with offices in New York and London, was founded in 1985 by its Chairman, Peter G. Peterson, and its President and CEO, Stephen A. Schwarzman. Blackstone’s Mezzanine Group is currently investing its first mezzanine fund which has commitments in excess of $1.1 billion. The firm has a special expertise in communications and e-commerce investing and in real estate investing. The Blackstone Group’s core businesses are Mergers and Acquisitions Advisory, Restructuring and Reorganization Advisory, Private Equity Investing, Private Mezzanine Investing, and Liquid Alternative Asset Investing.
About Chase Capital Partners
Chase Capital Partners (CCP) is a global private equity partnership with approximately $20 billion under management. CCP has been a leading provider of private equity capital since its inception in 1984 and is a diversified investor in most major industries. To date, CCP has closed more than 1000 individual transactions in North America, Europe, Asia and Latin America, including over 100 investments in technology and related companies. As part of its global investment strategy, CCP leverages its expertise across industries, geographies and products. Investment opportunities related to convergence of real estate, telecommunications and technology is currently an area of strategic focus. CCP is a leading global investor in mezzanine investments in public and private companies in most major industries. CCP’s primary limited partner is The Chase Manhattan Corporation, one of the largest bank holding companies in the United States.
Certain matters discussed within this press release are forward-looking statements within the meaning of the federal securities laws. Although FrontLine Capital Group believes that the expectations reflected in such forward-looking statements, including the ability to attract capital and the achievement of business plan objectives, are based upon reasonable assumptions, it can give no assurance that its expectations will be achieved. Factors that could cause actual results to differ materially from FrontLine expectations include changes in the business services industry, downturn in market valuations, particularly for Internet-related companies, failure to consummate anticipated transactions, finding acquisition opportunities which meet its investment strategy, general economic conditions, competition, changes in technology, technological obsolescence, interest rates, available capital, conflicts of interests of management, and other risks detailed from time to time in the FrontLine reports filed with the Securities and Exchange Commission, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.