LITTLE ROCK, Ark.--(BUSINESS WIRE)--
Windstream Corporation (NYSE: WIN) announced today that it has entered
into a definitive agreement to acquire D&E Communications (NASDAQ:
DECC), based in Ephrata, Pa., in a transaction valued at approximately
$330 million.
D&E Communications shareholders will receive 0.650 shares of Windstream
stock and $5 in cash per each D&E share under terms of the agreement
approved by the board of directors of both companies. Windstream expects
to issue approximately 9.5 million shares of stock valued at $86
million, based on the company's closing stock price on May 8, 2009, and
pay approximately $73 million in cash as part of the transaction.
Windstream also will assume estimated net debt of approximately $171
million. Windstream intends to finance the acquisition with existing
cash and current capacity on its revolving credit agreement.
"D&E Communications is an exceptional, well-run company with a quality
network that is 100 percent broadband capable," said Jeff Gardner,
president and CEO of Windstream. "These properties significantly expand
our operations in Pennsylvania and provide the opportunity to grow cash
flow, reduce our dividend payout ratio and create value for shareholders
and customers."
The acquisition is expected to close in the second half of 2009, subject
to certain conditions, including necessary approvals from federal and
state regulators and D&E Communications shareholders.
Operating Information
Windstream adds highly complementary rural properties in Pennsylvania
under the transaction. Windstream currently has approximately 200,000
access lines and serves 85 exchanges in Pennsylvania.
D&E Communications has approximately 118,000 ILEC access lines and about
44,000 high-speed Internet customers. High-speed Internet service is
available to 100 percent of D&E's ILEC lines, nearly half of which can
offer speeds up to 10 Mbps.
D&E operates as a competitive local exchange carrier (CLEC) in Altoona,
Harrisburg, Lancaster, Pottstown, Reading, State College and
Williamsport and serves approximately 47,000 lines.
The transaction also includes six wireless licenses for 700 MHz spectrum
covering a population of approximately 1.3 million in central
Pennsylvania.
Financial Information
D&E Communications generated $148 million in revenue and $64 million in
operating income before depreciation and amortization (OIBDA) in the
twelve months ended March 31, 2009.
Windstream estimates the transaction will be accretive to free cash flow
after expected annual synergies of approximately $25 million in
operating expenses and capital expenditure savings. The transaction
value represents a multiple of 3.7x OIBDA, after expected synergies.
Additional Information
Stephens Inc. and Goldman, Sachs & Co. acted as financial advisers and
Kutak Rock LLP acted as legal adviser to Windstream on the transaction.
Credit Suisse Securities (USA) LLC and Barley Snyder LLC acted as
financial and legal advisers to D&E Communications.
Non-GAAP Financial Measures
This press release references the non-GAAP financial measure OIBDA for
the twelve months ended March 31, 2009. A reconciliation of OIBDA to the
most directly comparable GAAP measure is presented below:
Operating income under GAAP: ($ 10 million)
Depreciation and amortization: $ 29 million
Goodwill and intangible asset impairment: + $ 46 million
OIBDA: $ 64 million
About Windstream
Windstream Corporation is an S&P 500 company that provides digital
phone, high-speed Internet and high-definition video and entertainment
services to residential and business customers in 16 states. The company
has approximately 3 million access lines and about $3.2 billion in
annual revenues. Windstream is ranked 4th in the 2009 BusinessWeek 50
ranking of the best performing U.S. companies. For more information
about Windstream, visit www.windstream.com.
About D&E Communications
D&E is an integrated communications provider offering residential Voice,
Video, High Speed Broadband and On-Site Computer Support services as
well as business-class Networking, Business Continuity, IT, Security,
Voice and Training solutions. Based in Lancaster County, D&E has been
serving communities in central Pennsylvania with industry-leading
innovation and an enterprising spirit for more than 100 years. For more
information, visit www.decommunications.com.
Cautionary Statement Regarding Forward-Looking Statements
Windstream claims the protection of the safe-harbor for forward-looking
statements contained in the Private Securities Litigation Reform Act of
1995. Forward-looking statements, including statements regarding the
completion of the acquisition and expected benefits of the acquisition,
are subject to uncertainties that could cause actual future events and
results to differ materially from those expressed in the forward-looking
statements. These forward-looking statements are based on estimates,
projections, beliefs and assumptions that Windstream believes are
reasonable but are not guarantees of future events and results. Actual
future events and results of Windstream may differ materially from those
expressed in these forward-looking statements as a result of a number of
important factors. Factors that could cause actual results to differ
materially from those contemplated above include, among others: receipt
of required approvals of regulatory agencies and D&E Communications'
stockholders; the possibility that the anticipated benefits from the
acquisition cannot be fully realized or may take longer to realize than
expected; the possibility that costs or difficulties related to the
integration of D&E Communications operations into Windstream will be
greater than expected; the ability of the combined company to retain and
hire key personnel; and those additional factors under the caption "Risk
Factors" in Windstream's Form 10-K for the year ended Dec. 31, 2008. In
addition to these factors, actual future performance, outcomes and
results may differ materially because of more general factors including,
among others, general industry and market conditions and growth rates,
economic conditions, and governmental and public policy changes.
Windstream undertakes no obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise. The foregoing review of factors that could
cause Windstream's actual results to differ materially from those
contemplated in the forward-looking statements should be considered in
connection with information regarding risks and uncertainties that may
affect Windstream's future results included in Windstream's filings with
the Securities and Exchange Commission at www.sec.gov.
Additional Information and Where to Find It
This press release may be deemed to be solicitation material in respect
of the proposed merger of D&E Communications and Windstream. In
connection with the proposed merger, Windstream will file a Registration
Statement on Form S-4 and D&E Communications will file a proxy statement
with the SEC. INVESTORS AND SECURITY HOLDERS ARE ADVISED TO READ THE
FORM S-4 AND THE PROXY STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED
WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THOSE DOCUMENTS WILL
CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER. The final proxy
statement will be mailed to shareholders of D&E Communications.
Investors and security holders may obtain a free copy of the Form S-4
and the proxy statement, when they become available, and other documents
filed by Windstream and D&E Communications with the SEC, at the SEC's
Web site at www.sec.gov. Free
copies of the Form S-4 and the proxy statement, when they become
available, may also be obtained from Windstream upon written request to
Windstream Investor Relations, 4001 Rodney Parham Road, Little Rock,
Arkansas 72212 or by calling (866) 320-7922, or from D&E Communications
upon written request to D&E Communications, P.O. Box 458, Ephrata,
Pennsylvania 17522, Attention: Corporate Secretary or by calling (877)
433-8632.
D&E Communications, Windstream and their respective officers and
directors may be deemed to be soliciting proxies from D&E
Communications' shareholders in favor of the proposed
merger. Information regarding D&E Communications' directors and
executive officers can be found in D&E Communications' Annual Report on
Form 10-K filed with the SEC. Additional information regarding the
interests of such potential participants will be included in the proxy
statement and the other relevant documents filed with the SEC when they
become available.
This communication shall not constitute an offer to sell or the
solicitation of an offer to sell or the solicitation of an offer to buy
any securities, nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation or sale would be unlawful
prior to registration or qualification under the securities laws of any
such jurisdiction. No offer of securities shall be made except by means
of a prospectus meeting the requirements of Section 10 of the Securities
Act of 1933, as amended.