San Francisco-Northpoint Communications Inc. last week said it received $150 million in cash from Verizon Communications Inc., the first step toward merging their digital-subscriber-line businesses.
In exchange, Verizon gets $150 million of convertible preferred Northpoint stock. The investment is in addition to a $200 million debt financing commitment from Verizon and is expected to fulfill Northpoint's funding requirements beyond the targeted mid-2001 close of the merger.
Verizon, the merged Bell Atlantic Corp. and GTE Corp., last month agreed to combine its DSL operations with those of Northpoint in a roughly $800 million deal. Verizon will set up a separate company, which will retain the Northpoint name, and will own 55 percent of the entity. Northpoint shareholders will own the rest.
The $350 million in preferred stock and debt financing will be converted to common stock at the close of the merger.
Northpoint plans to use the money to expand its network and scale its business, according to a press release.