The management of this telco network company have shelled out just short of 20 million on assets worth over 400 million, amazing. Please read the following report.

Many thanks to Brian for this excelent e- mail on the company.

If it's good enough for Warren Buffett ........
Published: 07:41 Fri 29 Aug 2003
By Joanne Wallen, Associate Editor,/b>


Alternative telecoms player GX Networks is defying all odds - it has just raised a further 12 million, made another acquisition and should be profitable 'very soon' thanks to the vice chairman's cunning plan - it's also in a sector that two US billionaire investors have bought into.

Peter Dubens is vice chairman of GX and also of ukbetting, and his strategy for both is the same. He is taking advantage of what he views as a unique moment in history to create two businesses that both become the beneficiaries of the massive over investment made by young companies in the past four years.

GX (GXN) today announced that it has acquired Firstnet Services, a similar telecoms business to itself, from Minorplanet (MPS) for 4.3 million. At the same time it has raised 12 million through an institutional placing of 261.9 million shares at 4.75p.

GX Networks was a private company that Dubens bought last year, before reversing it into AIM-listed Zipcom and changing the name to GX. The company bought two businesses that were virtually bankrupt and two more since that were 'not distressed' including today's acquisition of Firstnet Services from Minorplanet.

Dubens told Citywire that in total, these businesses have had investment of a massive 400 million, fuelled by the investment money being thrown around during the dotcom bubble. The opportunity comes from acquiring the expensive technology and infrastructure that this spending frenzy paid for, while chopping out all the excess costs and creating at a fraction of the original cost a viable business.

GX is a provider of telecoms and Internet hosting services to small and medium businesses. Another valuable legacy of the halcyon days is the long-term rental type agreement it enjoys with network owner Fibernet (FIB). GX is probably the sole survivor with a 25-year (now 23 years left to run) Indefensible Right of Use (IRU) agreement with Fibernet. This agreement effectively gives GX ownership of part of the network for the duration of the IRU. GX's previous owner paid some 11 million up front for the privilege, but it was an agreement that caused strange accounting anomalies among the carriers, and Fibernet for one stopped issuing IRU's.

Dubens says the IRU gives GX far lower capital costs than any other telco, since it is not responsible for maintaining the network for the next 23 years.

The idea therefore is to get as many customers as possible using the network, hence today's acquisition and the previous purchases of Transigent last October and Telenor Business Holdings' XTML and Compulink Information eXchange in July, each of which has been primarily for the customer base. The company now has some 20,000 customers and 44 million worth of billings.

Firstnet also adds some wireless and broadband technology and significantly increases the company's hosting capacity.

There is clearly significant duplication in putting these similar businesses together – call centres, management teams and the like, and Dubens and his team have already demonstrated at Ukbetting that they can be ruthless in stripping away unnecessary costs.

So after the devastation of the past few years, is there really still a viable business for an alternative telecoms operator? 'More so than ever,' reckons Dubens. He cites ukbetting's own situation as an extensive user of telecoms, spending some 700,000 a year on communications. The online betting site has leased lines, satellite links, virtual private networks and is absolutely dependent on having a service that can handle millions of bets coming through at the same time for a major sporting event. Dubens reckons small and medium businesses need a reliable alternative to the incumbents like BT, that can offer a more personalised service to their customers.

But he would say that. A more compelling reason to believe that there will be some winners in the sector is the recent investment by two well known billionaire investors, Warren Buffett and Carl Icahn.

Buffett, the traditionally tech-averse 'Sage of Omaha' emerged with a $20 million (12.7 million) stake in US telco Level 3 in May, while Icahn, a 67-year-old billionaire, took XO Communications out of bankruptcy in January and has since launched a $700 million hostile offer for bankrupt telecom provider Global Crossing.

Shortly after announcing his offer for Global Crossing, Icahn is reported to have said: 'This is like the railroads in the 1880's.'

Dubens himself is no slouch. As well as GX and Ukbetting he is a co-founder of Avocet Capital Management, a European technology hedge fund management business.

Two UK shrewd investors to have spotted the opportunity are A-rated Roger Whiteoak, with 4 million shares in the Framlington UK Smaller Companies Acc fund and also 45 million shares or 4.59% in the Throgmorton Trust (THRA). AAA-rated Patrick Evershed holds 0.51% for the New Star Select Opportunities fund.

GX's shares are currently up 0.125p at 5.625p, valuing the business at 56.6 million. If the company can break into profit any time soon, and the hunches of Dubens, Buffet and Icahn are right, now is the time to buy. Just remember this is still a risky business, and Buffett and Icahn at least can afford to lose a few shirts.ENDS.

Indeed risky but if all things go to plan just how big will the reward be.

GF

GX Networks plc

('GX Networks' or 'the Company')

Proposed acquisition of Pipex Internet Limited ('Pipex')

Proposed Placing of 443,200,000 Shares raising 27.7million

Proposed Board appointment

Proposed name change to Pipex Communications plc

Notice of Extraordinary General Meeting

GX Networks plc, the telecoms network operator and provider of business
broadband solutions, has agreed to acquire Pipex for a total consideration of
approximately 55 million and has effected a successful institutional Placing
raising approximately 27.7 million, both are subject to approval of
Shareholders at an EGM which has been convened for 27 October 2003. Following
completion of the Acquisition GX Networks will be renamed Pipex Communications
plc to leverage fully the Pipex brand.

The Pipex brand has a twelve-year track record and is widely recognised in the
UK. As at the end of June 2003 Pipex had about 6 per cent of the total UK ADSL
market and approximately over 10 per cent market share of non-BT plc owned ADSL
lines. Pipex provides a portfolio of ISP services to its 119,000 strong
customer base consisting of small corporates, SMEs and residential customers.

Pipex has been profitable and cash generative under its managing director David
Rickards, whose family owns 100 per cent of its shares. During the year ended
31 May 2003 the turnover of Pipex was approximately 31.6 million, EBITDA was
9.9 million and pre-tax profits were 10.1 million. As of today Pipex has
approximately 20 million of cash in the bank.

Pursuant to the Acquisition Agreement, the Rickards family has agreed to sell
and GX has agreed to purchase, subject to certain conditions, the entire issued
share capital of Pipex. The approximately 55 million consideration payable for
the shares of Pipex will be satisfied by the allotment of 5 million
Consideration Shares to the vendors and the payment of approximately 50 million
in cash on completion.

It is intended that the cash consideration is to be financed through a new debt
facility of approximately 15 million, the Placing, and approximately 10
million from the existing cash resources of the enlarged Group subject to a
financial assistance whitewash under sections 151 to 158 of the Companies Act
1985 to be effected prior to completion of the Acquisition.

In addition to the acquisition of Pipex, GX Networks has raised 27.7 million by
way of a placing with institutional and other investors, underwritten by Collins
Stewart Limited, of 443,200,000 shares at a placing price of 6.25p. It is
expected that the New Ordinary Shares the subject of such placing will be
admitted to trading on the Alternative Investment Market on 28 October 2003.
The proceeds of the Placing will be used to fund part of the acquisition
purchase consideration.

GX Networks has acquired three companies since the acquisition of Transigent in
October 2002. The acquisitions have been completed against the backdrop of
consolidations in the alternative telecommunication providers market which the
Company expects to continue throughout the remainder of 2003 and into 2004.
These acquisitions have also given GX Networks an enlarged product portfolio
across access, hosting security, VPN's, voice services and an enhanced customer
base. Following this transaction GX Networks will have a customer base of over
140,000 up from 600 in October 2002. GX Networks believes it is now well
positioned to further develop its business through both acquisition and organic
growth.

Peter Dubens, Chairman of GX Networks, said: 'This is an important acquisition
in the development of GX Networks as it allows us to become cash flow positive
immediately and it enables us to rebrand the entire group as Pipex, which is one
of the strongest brand names in the sector. Furthermore, it will improve the
mix of products that we sell, as Pipex has established a large broadband
customer base.'

It is proposed that David Rickards will join the Board in an executive capacity
on completion of the Acquisition. David Rickards is a highly successful
entrepreneur with a strong background in business processes and accounting.

David Rickards said: 'We needed an alliance with a larger organisation to take
our business to the next stage. GX, with its highly resilient network presence
and a culture similar to ours, is the right choice for Pipex. I am delighted
that I will be filling a senior executive role in the combined organisation
going forward, and that the Pipex brand name is to be maintained.'

Matters for disclosure under paragraph (f) of Schedule 2 of the AIM Rules with
respect to the appointment of David Peter Rickards as a Executive Director of GX
Networks plc:

Full name: David Peter Rickards
Age: 37
Current directorships: Pipex Internet Limited
Waycourt Estates Limited
Directorships held within the Highway Response Limited
last 5 years:

There are no other matters that are required to be announced with regards to
this appointment.

Copies of the documents relating to the acquisition and placing will be
available for inspection during usual business hours on any weekday (Saturday
and public holidays excepted) for a period of 22 days after the date of this
document at the offices of SJ Berwin, 222 Grays Inn Road, London WC1X 8XF.



- Ends -

I must apologize to you all out their as jules beat me to the news release. Anyway it's nice to read the good news twice. Next time before I post I will read others first lol !!! Again sorry

a repeat...

i think u'll find i got there first...

So what effect is the placement likely to have on the price in the short term?

Will this be another protected sell that holds the price down for a while or is it free to find its own level now?

They would be MAD and extremly docile to sell at this level - this is going to make a bucket for Institutions, placing from 6.5p which was the price yesterday...Expect them to look for a serious return on their investment...

Not just saying that...

Huge realisation potential for all...

ta...

Jules99

Great news.

gf.

Great news GF. Did you see the three large buys that went through after the market has closed?

I think this stock will fly on Monday.

On Aim, there was a buzz around telecoms group GX Networks again. City barflies are convinced that the company is about to announce the acquisition of Pipex, a web hosting business once owned by WorldCom, for 60m. They reckon the deal, which will almost double the size of GX, is likely to be financed by a share placing and bank debt. GX rose 0.62p to 7.25p.

and thanks goldfinger/jules99
for tipping this share. When you tipped this share i bought 415000 shares in this company and i have made 5500 in last two days i have to buy you drink and this first time i have bought shares and am 22years old so 5500 in two days is not bad.

Thanks again

aren't you forgetting your British Energy shares?

rasool - 12 Sep'03 - 21:06 - 4 of 13


recovery is only around the corner i have brought 100000 shares yesterday

Good one Ricardopage. I no longer take any notice of the postings from rasool, it's full of ****. I wish he/she would stop b*********g/ramping.

At least his profits on GX helped towards his losses on BGY. Thats if you can sell them that is BGY i mean.

Hi..Cannot help to notice that at times these boards get very scrappy,as above.
My point is that GXN/PIPEX is now a cash positive profitable company overnight and except for the fact that GXN issue too many shares we have a comany that has a brand..pipex,customers and profit...this deal was not buying cheap assets but a cash generative and profitable company being bought.
Decision invest more money Monday and enjoy the ride.

Hi..Cannot help to notice that at times these boards get very scrappy,as above.
My point is that GXN/PIPEX is now a cash positive profitable company overnight and except for the fact that GXN issue too many shares we have a comany that has a brand..pipex,customers and profit...this deal was not buying cheap assets but a cash generative and profitable company being bought.
Decision invest more money Monday and enjoy the ride.

Hi..Cannot help to notice that at times these boards get very scrappy,as above.
My point is that GXN/PIPEX is now a cash positive profitable company overnight and except for the fact that GXN issue too many shares we have a comany that has a brand..pipex,customers and profit...this deal was not buying cheap assets but a cash generative and profitable company being bought.
Decision invest more money Monday and enjoy the ride.

Hi...This board does get scrappy at times,and a bit childish...enough of that.
GXN have done a deal which in buying PIPEX,has overnight gone from a company with promise to one that produces the profits,is cash generative and is only blighted by the vast no of shares in circulation.
Ilike the quality of the article at the head of the thread and trust we see more that.
That article with its facts,made me purchase 2 weeks ago and because of todays action will be topping up on Monday.
Please can we have money solid info and less c...
Thanks..Richard

Hi...Oh dear thought first post lost!!!!

Richard

Some massive buys near the close by traders.

I presume GXN will rocket on monday once everyone has digested the news today.
How much do you think GXN will be by monday or next week in general?

And how long will they continue to peak for or what share price will they get to in near future before they stabilise/profit taking takes place.

This is the 1st bit of really good news i've had in my portfolio in last few months as i only bought these shares at start of week.

Good luck to all in GXN

Taken from the Independent.
Last paragraph,
The deal boosts GX Networks' total number of customers to around 140,000, up from around 600 a year ago and gives it a foothold in the broadband market. It estimates it has about a 6 per cent share of broadband connections.

Following the deal, GX Networks will have net debt of around 2m since Pipex has a 20m cash pile.

Only 2mln debt going forward and cash flow positive immediately. If this is not a multi bagger, I dont know what is.

Price GXN monday ? who knows,how long piece of string.It all depends on that which them in the know,know.For me as long as I get a better return on that which I would get in a building society,I'm happy.

GXN, is a long term punt as I have always maintained. This is no big one day riser like YOO etc. Its a company run by good management who will make sure it brings home the bacon. Stick with it.

GF.

Moving up slowly but surely.

gf.