> TeraGo to Divest Cloud and Colocation Business Lines to Hut 8 Mining Corp.
Strategic Divestiture Positions TeraGo to Focus on its 5G Private Networking Business
TORONTO, Jan. 20, 2022 /CNW/ – TeraGo Inc. (“TeraGo” or the “Company”) (TSX: TGO) (www.terago.ca), announced today it has entered into a definitive agreement to sell its cloud and colocation business lines to a subsidiary of Hut 8 Mining Corp. (Nasdaq: HUT) (TSX: HUT) (“Hut 8”) for an aggregate consideration of Cdn.$30 million payable in cash upon completion of the transaction.
Under the agreement, Hut 8 is acquiring TeraGo’s cloud and colocation customers, employees, certain other contracts, intellectual property rights, and other assets related to its cloud and colocation business lines. The company’s senior executives and employees that are part of TeraGo’s fixed wireless access and 5G business line will remain with TeraGo. Additionally, in order to ensure the smooth operation and transfer of the cloud and colocation business lines, TeraGo will provide support and transition services over the next few months.
“TeraGo is uniquely positioned in Canada with our broad customer base for wireless services and our extensive millimeter wave spectrum licenses; this transaction will enable us to focus on leveraging these assets in our move to become Canada’s leading provider of mmWave 5G private networks for businesses,” said TeraGo’s CEO Matthew Gerber. “We see the need for 5G private networks accelerating in the next few years as manufacturers, distributors, transportation companies and other industries seek to leverage the benefits of ultra-fast, ultra-low latency, private and secure communications to improve operational efficiencies and lower costs. We also believe that we found a great partner in Hut 8 as it has the capabilities to support our cloud and colocation customers for the long term, and provides opportunities for our two companies to deliver services to each other’s customers going forward.”
The transaction is expected to close in the first quarter of 2022.
DH Capital is serving as financial advisor to TeraGo and InHaus Legal LLP & Norton Rose Fulbright Canada LLP are acting as its legal counsel.
TeraGo owns a national spectrum portfolio of exclusive 24 GHz and 38 GHz wide-area spectrum licenses including 2,120 MHz of spectrum across Canada’s 6 largest cities. TeraGo provides businesses across Canada with cloud, colocation and connectivity services. TeraGo manages over 3,000 cloud workloads, operates five data centres in the Greater Toronto Area, the Greater Vancouver Area, and Kelowna, and owns and manages its own IP network. The Company serves business customers in major markets across Canada including Toronto, Montreal, Calgary, Edmonton, Vancouver, Ottawa and Winnipeg. For more information about TeraGo, please visit www.terago.ca
This news release includes certain forward-looking statements. By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond TeraGo’s control. The completion of the proposed transaction with Hut 8 is subject to certain terms and conditions which TeraGo believes to be customary. Such terms and conditions may not be satisfied or obtained in accordance with their terms, in which case the proposed transaction could be modified or terminated, as applicable. Other forward-looking statements may include but are not limited to statements regarding the timing for closing of the proposed transaction, as well as statements regarding the further developing our 5G Fixed Wireless Access program, consistently executing across all fronts of the business, success in providing Canadian enterprises with managed services and the 5G fixed wireless trials being conducted by the Company. All such statements constitute “forward-looking information” as defined under, applicable Canadian securities laws. Any statements contained herein that are not statements of historical facts constitute forward-looking information. The forward-looking statements reflect the Company’s views with respect to future events and is subject to risks, uncertainties and assumptions, including those risks set forth in the “Risk Factors” sections in the annual MD&A of the Company for the year ended December 31, 2020 and the MD&A of the Company for the three and nine months ended September 30, 2021, each available on www.sedar.com under the Company’s corporate profile. Factors that could cause actual results or events to differ materially include the inability to consistently achieve sales growth across all lines of TeraGo’s business including managed services, inability to complete successful 5G technical trials, the impacts and restrictions caused by the COVID-19 pandemic are prolonged which may further delay customer trials and/or cause a negative impact on future financial results of the Company, TeraGo’s Pandemic Response Plan may not mitigate all impacts of COVID-19, the results of the 5G trials not being satisfactory to TeraGo or any of its technology partners, regulatory requirements may delay or inhibit the trial, the economic viability of any potential services that may result from the trial, the ability for TeraGo to further finance and support any new market opportunities that may present itself, and industry competitors who may have superior technology or are quicker to take advantage of 5G technology. Accordingly, readers should not place undue reliance on forward-looking statements as several factors could cause actual future results, conditions, actions or events to differ materially from the targets, expectations, estimates or intentions expressed with the forward-looking statements. Except as may be required by applicable Canadian securities laws, TeraGo does not intend, and disclaims any obligation, to update or revise any forward-looking statements whether in words, oral or written as a result of new information, future events or otherwise.
SOURCE TeraGo Inc.
For further information, please contact:
TeraGo Investor Relations
Matt Glover and John Yi, Gateway Investor Relations