-- Advances strategy to grow broadband and business revenues, which will
represent more than half of total revenue after the transaction closes
-- Drives free cash flow accretion in first full year through $30 million
in annual expense and capital savings and lowers dividend payout ratio
-- Adds approximately 90,000 business customers in complementary markets in
16 states across the Southeast and Midwest
LITTLE ROCK, Ark.--(BUSINESS WIRE)--
Windstream Corporation (NYSE: WIN) announced today that it has entered
into a definitive agreement to acquire NuVox, Inc., a privately held
competitive local exchange carrier based in Greenville, S.C., in a
transaction valued at approximately $643 million.
Windstream expects to issue approximately 18.7 million fixed shares of
stock valued at $183 million, based on Windstream's closing stock price
on Nov. 2, 2009, and pay approximately $280 million in cash as part of
the transaction. Windstream also will assume estimated net debt of
approximately $180 million. Windstream intends to finance the
acquisition with existing cash and current capacity on its revolving
credit agreement.
"This transaction significantly advances our strategy to grow broadband
and business revenues, which is important given the growth prospects in
these areas," said Jeff Gardner, president and CEO of Windstream. "NuVox
has a strong performance record of growing revenues and improving
margins and offers the potential for continued business growth. The
transaction will be accretive to Windstream's free cash flow in the
first full year and lowers our dividend payout ratio, which is a key
element of our acquisition philosophy."
"At NuVox, we are excited about the opportunity to combine our products,
operating platforms, and sales distribution for the business enterprise
market with Windstream's strong market presence, superb record of
performance, and substantial financial strength," said Jim Akerhielm,
CEO for NuVox. "This transaction is clearly the optimal path forward for
our customers, our employees, and our shareholders."
Broadband and business revenues will represent more than half of
Windstream's total revenue after the transaction closes. Additionally,
NuVox's complementary footprint allows Windstream to strengthen its
presence across the Southeast and Midwest, providing expanded reach to
focus on small and medium business growth opportunities.
Windstream estimates the transaction will be accretive to free cash flow
after expected annual synergies of approximately $30 million in
operating expenses and capital expenditure savings.
The boards of both companies have approved the transaction, which is
expected to close in the first half of 2010, subject to certain
conditions, including necessary approvals from federal and state
regulators.
NuVox is a leading regional competitive local exchange carrier with 48
locations in 16 contiguous Southeastern and Midwestern states. The
company offers advanced IP-based voice and data services to
approximately 90,000 business customers. The company has approximately
1,700 employees, including about 700 in Greenville. Windstream expects
to maintain a significant employment presence in Greenville to manage
sales and service for the company's combined competitive local exchange
properties after the transaction closes.
NuVox generated $561 million in revenue and $115 million in operating
income before depreciation and amortization (OIBDA), adjusted to remove
the impact of merger, integration and other non-recurring items, in the
twelve months ended June 30, 2009.
Additional Information
Oppenheimer & Co. Inc. is acting as lead financial adviser and Kutak
Rock LLP as legal adviser to Windstream on the transaction. Deutsche
Bank Securities Inc. and Wells Fargo Securities, LLC are acting as
financial advisers and Cravath, Swaine & Moore LLP as legal advisers to
NuVox.
Non-GAAP Financial Measures
This press release references the non-GAAP financial measure OIBDA for
the twelve months ended June 30, 2009. A reconciliation of OIBDA to the
most directly comparable GAAP measure is presented below:
Operating income under GAAP: $28 million
Merger, integration and other non-recurring charges: $7 million
Depreciation and amortization: + $80 million
OIBDA (adjusted): $115 million
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; 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 NuVox 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 and in subsequent Securities and Exchange Commission
filings. 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 NuVox and Windstream. In connection with the
proposed merger, Windstream will file a Registration Statement on Form
S-4 with the SEC that will contain an information statement/prospectus. NuVox
investors and security holders are advised to read the information
statement/prospectus and any other relevant documents filed with the SEC
when they become available because those documents will contain
important information about NuVox, Windstream and the proposed merger.
The final information statement/prospectus will be mailed to
shareholders of NuVox. Investors and security holders may obtain a free
copy of the information statement/prospectus when it becomes available
at the SEC's Web site at www.sec.gov.
Free copies of the information statement/prospectus, when it becomes
available, may also be obtained from Windstream upon written request to
Windstream Investor Relations, 4001 Rodney Parham Road, Little Rock, AR
72212 or by calling (866) 320-7922, or from NuVox upon written request
to NuVox, Two North Main Street, Greenville, SC 29601 or by calling
(864) 672-5000 or (877) 466-8869. 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.
About Windstream
Windstream Corporation is an S&P 500 company that provides phone,
high-speed Internet and high-definition digital TV services to customers
in 16 states. The company also offers a wide range of IP-based voice and
data services and advanced phone systems and equipment to businesses and
government agencies. The company has approximately 3 million access
lines and about $3.1 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 NuVox
NuVox delivers customized managed communications services, information
technology, data, security, and voice solutions designed specifically
for business customers. NuVox serves approximately 90,000 customers in
the Southeast and Midwest, and provides select services throughout the
United States. NuVox delivers services via its industry-leading
MPLS-based wide area private IP network. NuVox has been certified by
Cisco and is a member of the Cisco Powered Program for VoxNET, the
company's MPLS wide-area networking solution. In addition to retail
solutions, NuVox also provides services to government and wholesale
customers. For more information, visit www.nuvox.com.
NuVox Locations:
Alabama Illinois North Carolina
Birmingham East St. Louis Asheville
Mobile Charlotte*
Indiana Greensboro*
Arkansas Indianapolis Raleigh*
Little Rock* Wilmington
Kansas
Florida Kansas City Ohio
Daytona Beach Wichita Akron
Destin Canton
Fort Lauderdale Kentucky Cincinnati
Fort Myers Lexington* Columbus
Jacksonville Louisville Dayton
Miami
Orlando Louisiana Oklahoma
Sarasota Baton Rouge Oklahoma City
Tampa Lafayette Tulsa
West Palm Beach New Orleans
Winter Haven South Carolina
Mississippi Charleston
Georgia Biloxi Columbia
Atlanta Jackson Greenville
Augusta
Savannah Missouri Tennessee
Kansas City Knoxville
Springfield Memphis
St. Louis Nashville
*Windstream/NuVox shared markets