Global Capacity Contracts to Acquire Vanco Direct USA, LLC

CHICAGO--(BUSINESS WIRE)--Global Capacity (parent: Capital Growth Systems, Inc.) (OTCBB: CGSY.OB), the telecommunications industry's first logistics company, today announced that it has contracted to acquire Vanco Direct USA, LLC (VDUL) and is in the process of finalizing the financing necessary to consummate the transaction. As the transaction is subject to Federal regulatory approval, the Company anticipates effecting the financial closing within the next 7 to 10 days, followed by a 120-day transition period to integrate the new acquisition into its current operations. During that time, it plans to file the retrospective financial statements for VDUL as required for acquisitions by an SEC registrant. VDUL is a U.S.-based business that was a subsidiary of Vanco PLC, the London-based global virtual network operator. The balance of Vanco PLC was acquired by Reliance Globalcom Limited in May of this year. The transaction is valued at $15 million, subject to certain adjustments at closing, and is expected to be immediately accretive to Global Capacity’s results. The combined businesses will remain headquartered in Chicago, IL and will operate under the Global Capacity brand. Capstone Investments is acting as the placement agent for the financing related to the acquisition.

The addition of VDUL will extend Global Capacity’s leadership position as the first global telecom logistics provider. VDUL’s software and intellectual property assets are complementary to Global Capacity’s unique global pricing and supply chain management systems and strengthen the Company’s intellectual property that forms the core of its logistics business model. VDUL’s base of recurring revenue customers fits seamlessly into Global Capacity’s Strategic Sourcing business, while the customers and revenue from its software business will bolster Global Capacity’s high-value Software as a Service (SAAS) business. Strategic Sourcing and SAAS, taken together with its Engineering Services and Remote Management Services, form the core of Global Capacity’s predictable revenue business. With this acquisition, consolidated predictable revenues are expected to be $70 million on an annualized basis. Cash flow from Global Capacity’s predictable revenue business is used to fund investment in its Optimization Solutions business, which has tremendous revenue and margin upside. However, Optimization Solutions revenue is less predictable than Global Capacity’s other revenue due to factors such as the timing of implementation and realization of identified customer savings. On a consolidated basis, the combined companies are expected to be cash flow positive in the first quarter of 2009 and going forward.

“Global Capacity operates in a highly-fragmented, $200 billion global access network market where poor profit performance and margin pressure are forcing companies to identify new ways to control costs,” says Patrick Shutt, CEO of Global Capacity. “Our logistics business model helps customers control costs by automating manual processes such as pricing, provisioning, and network management, by optimizing their installed base of access networks through overcharge analysis, financial grooming, and physical grooming, and by helping them migrate networks to more efficient platforms through network novations and technology refreshes. This acquisition strengthens our customer base, our product portfolio, and our financial performance, and we are very pleased to welcome Vanco Direct USA’s employees and customers to the Global Capacity family.”

Chris Conant, Chief Operating Officer of VDUL commented, “Global Capacity is redefining the market and helping customers to streamline and effectively manage their global networks. We see this as an opportunity to work with a pioneer in the industry and incorporating our service offerings will significantly contribute to Global Capacity’s ongoing growth and success.”

Conference Call

Upon receipt of regulatory approval and completion of the financial closing, the company will hold a conference call to discuss the acquisition and address questions. Details of the call will be issued in the press release announcing the completion of the financial closing.

About Global Capacity

Capital Growth Systems, Inc. dba Global Capacity provides a fully-integrated telecommunications supply chain management system that streamlines and accelerates the process of designing, building, and managing customized communications networks. It offers a comprehensive suite of services to enterprises, systems integrators, and carrier customers worldwide. Global Capacity has operational centers in Waltham, MA; Manchester, England; and Houston, TX; with offices in Chicago, IL; New York, NY; Austin, TX; London, England; and Lisbon, Portugal. For more information, please visit www.globalcapacity.com or contact the Company at +1 (312) 673-2400.

Forward-Looking Statements

Certain information discussed in this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and Federal securities laws. Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions at the time made, it can give no assurance that its expectations will be achieved. Readers are cautioned not to place undue reliance on these forward-looking statements.

Forward-looking statements are inherently subject to unpredictable and unanticipated risks, trends, and uncertainties such as the Company's ability to accurately forecast its operating results; the Company’s ability to obtain the necessary regulatory approval and finalize and close the funding of the acquisition of VDUL, the Company’s ability to successfully integrate the VDUL business, the ability to predict the volume of business or level of profitability of network optimization contracts; the ability to achieve profitability or generate positive cash flow; the availability of financing; the ability to procure a listing of its securities on one or more public stock markets; and other risks associated with the Company's business. Completion of the financing for the transaction is subject to the risks of finalizing, executing, and funding of definitive loan documentation. For further information on factors which could impact the Company and its subsidiaries, and the statements contained herein, reference should be made to the Company's filings with the Securities and Exchange Commission, including annual reports on Form 10-KSB, quarterly reports on Form 10-Q, and current reports on Form 8-K. The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.

Customers, Partners:
Global Capacity
Jack Lodge
Chief Operating Officer
+1 781-902-5196
jlodge@globalcapacity.com
or
Media, Analysts:
Patrick Van de Wille
FD-Ashton Partners
+1 312-553-6704
patrick.vandewille@fdashtonpartners.com
or
Investors:
Jeff Salzwedel
Salzwedel Financial Communications, Inc.
+1 503-722-7300
jeff@sfcinc.com