Globo Cabo S.A.

completed

Globo Cabo is Brazil’s largest pay-TV operator and a leader in the provision of high speed internet services to the residential and SOHO market. The company was set up in 1998 following the merger of Globo Cabo''s operations and those of Multicanal S.A. Its network now passes 6.5 million homes and has 1.44 million subscribers (25% penetration). Its management and operations are first class. The company is the market leader in Brazil with a 43% market share. It has very strong content, and is now also offering broadband cable modem services and corporate network data transmission services (fiber optic, coaxial cable and wireless solutions to transmit voice, data and video) to a variety of market segments, including small and medium enterprises. Additional telecommunication services may also be added in due course.Today, the company is the result of a number of mergers and acquisitions involving other companies in the sector. Over the past several years, GC and the companies it acquired borrowed heavily to finance network capital expenditures, subscriber acquisition costs and other costs associated with a start-up operation in this sector. A significant portion of those borrowings were in USD which has added to the burden of this debt load. The project is a recapitalization involving raising new equity capital and lengthening debt maturities. With the major shift in the view of the global capital markets towards this type of business, from an oversupply of capital to an undersupply, many companies have found themselves without the ability to refinance maturing debt. In the case of Globo Cabo, this global trend has been accentuated by a general reluctance to lend into or invest in emerging markets and the slowdown in the Brazilian economy occasioned by the Brazilian energy crisis and some measure of contagion from Argentina. IFC''s role in this project would be to allow the company to extend debt maturities and access significant amounts of local currency funding at a time when that might otherwise be difficult.This would be the first partial credit guarantee used in the Brazilian bond market. As such, we expect that it will have a positive impact on the development of the local currency bond market. In addition, the increased financial flexibility should allow the company to continue investment in Brazil''s broadband infrastructure at a time when it would not be likely to be able to do so otherwise.As of May 2, 2002, the company changed its name to "NET Serviços de Comunicação S.A." The relevant notices to shareholders and press releases were made by the company on May 2. This name change does not impact the project in any way.