Business News - STAR To Spin Off European OperationsBusiness News - STAR To Spin Off European Operations
June 1, 1999
By Khali Henderson
STAR To Spin Off European Operations
By Khali Henderson
STAR Telecommunications Inc., Santa Barbara, Calif., has announced it will be spinning
off and consolidating its European operations under a wholly owned subsidiary called
Apollo Communications. The move is designed to better leverage the value of the European
asset by separating it from its U.S.-based parent.
In a press statement STAR Chairman and CEO Chris Edgecomb says, "We believe that
our European operations have created significant value that is not reflected in the
current price of our overall company’s stock." The day of the April announcement,
STAR’s stock showed a 52-week low of 7 1/8 and a high of 31 1/2.
Director of Investor Relations Ben Helvey explains that STAR expects Apollo’s market
flexibility will be enhanced as a standalone European operation.
STAR has retained Morgan Stanley Dean Witter to advise it on the restructuring, which
Helvey says will consolidate five existing European operations, including STAR Europe,
STAR Telecommunications Deutschland GmbH, STAR Telecommunications Austria GmbH, STAR
Telecommunications Switzerland S.a.r.l. and STAR Telecommunications France. The latter
three are new operations incorporated in December and are expecting operating licenses
from the respective national regulators in the next few weeks, Helvey says.
Although each unit now will fall under the Apollo banner structurally, it has not been
determined whether the operations also will adopt the Apollo name, Helvey says, adding
that the company will be conducting brand research over the next two months before
reaching a decision.
Helvey says Apollo also will include operations planned in Belgium, Italy and Spain.
These operations were scheduled for launch in first-quarter 2000, but may be accelerated
under the new Apollo management team, he says.
Steve Carroll has been named CEO of the new combined entity. Other executives are yet
to be named, Helvey says. Carroll, formerly president of WorldCom Europe, has been
chairman of Star Europe Ltd., STAR’s U.K. subsidiary, since February 1998. Carroll also
served as president of IDB WorldCom and, after its acquisition by LDDS in December 1994,
of LDDS WorldCom International.
The spinoff is pending a favorable ruling–expected by August–from the U.S. Internal
Revenue Service on the tax-free nature of the transaction, Helvey says.
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