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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) January 30, 1998
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PSINet Inc.
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(Exact name of registrant as specified in its charter)
New York 0-25812 16-1353600
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
510 Huntmar Park Drive, Herndon, Virginia 20170
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (703)904-4100
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(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets.
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On January 30, 1998, PSINet Inc. (the "Company") completed the
acquisition of approximately 69% of the common shares ("iSTAR Shares") of iSTAR
internet inc. ("iSTAR"), a Canadian Internet solutions company providing
advanced Internet services for businesses, institutions and individuals. The 69%
interest in iSTAR represents approximately 21.7 million iSTAR Shares. The iSTAR
Shares were validly deposited by iSTAR's shareholders pursuant to the Company's
January 6, 1998 cash offer to purchase all of the outstanding common shares of
iSTAR (estimated to be 31,579,220 shares as of January 6, 1998) for cash
consideration of Cdn. $0.75 (U.S. $0.52) per share (the "Offer"). All of the
iSTAR Shares deposited as of 12:01 a.m. (Vancouver time) on January 28, 1998
have been taken up and paid for by the Company in cash. Notices of guaranteed
delivery were received for approximately 1.1 million additional iSTAR Shares.
These additional iSTAR Shares were taken up by the Company on February 2, 1998.
As a result of an extension of the Offer, approximately 2.1 million additional
iStar Shares were taken up by the Company on February 10, 1998, and a further
0.3 million iStar Shares (deposited pursuant to notices of guaranteed delivery)
are expected to be taken up, which will bring the total number of iSTAR Shares
purchased by the Company to approximately 80.5% of the outstanding iSTAR Shares.
Financing for the acquisition of the iSTAR Shares was provided by
Fleet National Bank ("Fleet"). Fleet provided the Company with a U.S.
$20,000,000 facility maturing on the earlier of (i) the consummation of a public
offering by the Company of its debt or equity securities or (ii) July 31, 1998.
The loan provides for interest on the outstanding balance at a rate per annum
equal to the prime rate plus 1.375%. Additionally, the loan has been
incorporated into the Company's existing credit facility with Fleet and is
secured by substantially all of the Company's assets, including a pledge of
certain of its subsidiaries' stock (including, without limitation, the acquired
iSTAR Shares).
Since the Offer has been completed, the Company may (i) seek to call a
special meeting of shareholders to consider a subsequent transaction for the
purpose of enabling it to acquire all the iSTAR
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Shares not deposited under the Offer, or (ii) take such further action or
decline to take any further action, as it deems appropriate under the
circumstances.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
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(a) Financial Statements.
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The required financial statements and Auditors'
Report with respect to the acquired business
referred to in Item 2 of this Report are
incorporated by reference from pages I-1 through I-
28 of the Company's Proxy Statement, dated December
19, 1997, relating to the Company's Special Meeting
of Shareholders held on January 23, 1998, as filed
with the Commission on December 22, 1997.
(b) Pro Forma Financial Information.
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All pro forma financial information required by this
item has been previously reported by the Company and
is incorporated by reference to the Company's
Current Report on Form 8-K, dated January 7, 1998,
as filed with the Commission on such date.
(c) Exhibits.
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Following is the index of Exhibits furnished
in accordance with the provisions of Item 601
of Regulation S-K, filed as part of this Current
Report on Form 8-K:
Exhibit No. Description
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23-1 Consent of KPMG, Chartered
Accountants
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: February 12, 1998 PSINET INC.
By: /s/ David N. Kunkel
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David N. Kunkel
Senior Vice President,
Secretary and General
Counsel
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EXHIBIT 23.1
[LETTERHEAD OF KPMG]
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the registration
statement on Form S-8 (Nos. 33-98314, 33-98316, 33-98320, 33-99464, 33-99466,
33-99470, 33-04008) of PSINet Inc. of our report dated July 10, 1997, except for
notes 12, 18, 19 and 20 which are as at December 5, 1997, relating to the
financial statements of iSTAR internet inc. which appear in PSINet Inc.'s
current report Form 8-K dated February 12, 1998.
KPMG
Chartered Accountants
Ottawa, Canada
February 11, 1998
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