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TNS Prepares to Make Initial Public Offering

Reston Telecom Firm Traded as Transaction Network Services Before PSINet Acquired It

By Ellen McCarthy
Washington Post Staff Writer
Tuesday, March 16, 2004; Page E05

TNS Inc., a Reston company that provides telecommunications services for credit card, ATM and other banking transactions, is planning to hold an initial public offering as early as today.

The company plans to sell 4.42 million shares for $16 to $18 each, according to its filing with the Securities and Exchange Commission. If priced at $18, that would raise $79.56 million. A company spokeswoman declined to comment on the offering.

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TNS is one of four local technology companies that have informed the SEC of plans for initial public offerings in recent months, the latest signs that the IPO market for tech firms is coming back to life. Intelsat Ltd., a Bermuda-based satellite services company that has most of its operations in the District, yesterday filed papers for its long-planned initial sale of common stock. Intelsat, which used to be owned by a consortium of world governments but went private two years ago, hopes to raise up to $500 million.

Blackboard Inc., an online education company, filed early this month to raise up to $75 million in its initial public offering. Intersections Inc., a Chantilly company that provides identity theft and credit management services, filed in December for an initial public offering that could raise up to $106.25 million, $51 million of which would go to the company and $55.25 million of which would go to a selling shareholder.

TNS's stock sale will bring a well-known Washington area technology company, and the man who founded it, full circle.

TNS in its first version was known as Transaction Network Services Inc., founded by John J. McDonnell Jr. in 1990. In 1994 it completed a public offering, selling 1.8 million shares for $10 each. Five years later, PSINet Inc., an Internet service provider based in Herndon, agreed to acquire Transaction Network Services for $720 million in cash and stock.

PSINet, burdened by too much debt from a string of acquisitions, filed for bankruptcy protection in June 2001, but not before selling Transaction Network Services as part of an effort to sell subsidiaries and raise cash. McDonnell and other senior managers, together with buyout firm GTCR Golder Rauner LLC, bought Transaction Network Services from PSINet for $277 million. The company's corporate name now is TNS Inc., and will trade on the New York Stock Exchange under the symbol TNS.

GTCR, based in Chicago, raises money for management-led buyouts of companies. It financed the creation and growth of DigitalNet Holdings Inc. and helped that Herndon government contractor go public in October. It will continue to control TNS after the initial stock offering.

For the year ended Dec. 31, the company's revenue was $223.4 million, up from $202.2 million the previous year. The company's point-of-sale division, which transported 7.9 billion ATM, credit card and debit card transactions last year, accounted for 55 percent of its revenue for 2003. TNS lost $1.1 million in 2003, compared with a $2.4 million loss in 2002.

McDonnell, now 66, is the company's chairman and chief executive. Brian J. Bates, 43, is the company's president and chief operating officer.

The offering is being underwritten by a team of investment banks led by J.P. Morgan Chase & Co., Lehman Brothers Inc. and Credit Suisse First Boston Corp. TNS said it plans to use the funds raised through its offering to pay down its existing debt to a syndicate of banks.


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