CT Communications (NASDAQ:CTCI)
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Windstream Corporation (NYSE: WIN) announced today that it has entered
into a definitive agreement to acquire all of the outstanding shares of
CT Communications, Inc. (NASDAQ: CTCI) for $31.50 per share in cash,
which represents a 31 percent premium to CT Communications’
previous 30-day trading average. Including the assumption of cash and
debt, the transaction is valued at approximately $585 million.
The acquisition is expected to close in the second half of 2007, subject
to certain conditions, including necessary approvals from federal and
state regulators and CT Communications shareholders. Windstream intends
to finance the acquisition with debt and existing cash while maintaining
its strong balance sheet.
Strategic Rationale
With this acquisition, Windstream adds attractive markets in North
Carolina, which are adjacent to existing operations. CT Communications
has broadband availability to 95 percent of its ILEC lines, 75 percent
of which can offer up to 10Mb speeds. Once this acquisition is fully
integrated, Windstream expects to realize free cash flow improvements
through expected annual cost synergies of approximately $30 million as
well as reductions in capital expenditures.
“CT Communications’
management and employees have built an exceptional business and are
highly respected in their local communities. CT Communications fits
strategically with Windstream and advances our strategy of continuing to
grow through acquisitions while expanding our free cash flow,”
said Jeff Gardner, President and CEO of Windstream.
Financial Information
CT Communications generated $179.2 million of revenue, $57 million of
operating income before depreciation and amortization (OIBDA) and $25.3
million of operating income in the twelve months ended March 31, 2007.
Windstream estimates the transaction will be approximately 4.0 percent
accretive to leveraged free cash flow, after synergies, in the first
full year of operations.
On a pro forma basis, Windstream will have approximately 3.4 million
access lines and 744,000 broadband customers.
Additional Information
Stephens Inc. and Kutak Rock, LLP acted as financial and legal advisors
to Windstream on the transaction. Raymond James & Associates, Inc. and
Moore & Van Allen, PLLC acted as financial and legal advisors to CT
Communications.
Non-GAAP Financial Measures
This press release references the non-GAAP financial measure OIBDA for
the twelve months ended March 31, 2007. A reconciliation of OIBDA to the
most directly comparable GAAP measure is presented below:
Operating income under GAAP:
$
25.3 million
Depreciation and amortization:
+
$
31.7 million
OIBDA:
$
57 million
About Windstream
Windstream Corporation (NYSE: WIN) provides voice, broadband and
entertainment services to customers in 16 states. The company has
approximately 3.2 million access lines and about $3.2 billion in annual
revenues. For more information, visit www.windstream.com.
About CT Communications
CT Communications, Inc. (NASDAQ: CTCI), headquartered in Concord, N.C.,
is a growing provider of integrated telecommunications and related
services to residential and business customers located primarily in
North Carolina. CTC offers a comprehensive package of telecommunications
services, including broadband high-speed Internet services, local and
long-distance telephone services, and digital wireless voice and data
services. More information can be found at www.ctc.net.
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 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: adverse changes in economic conditions in
the markets served by Windstream; the extent, timing and overall effects
of competition in the communications business; failure to realize
expected benefits as a result of the transactions described above,
including the ability to integrate CT Communications’
business into existing operations and realize the synergies expected
from this transaction; material changes in the communications industry
generally that could adversely affect vendor relationships with
equipment and network suppliers and customer relationships with
wholesale customers; changes in communications technology; the risks
associated with the separation of the publishing business; the potential
for adverse changes in the ratings given to Windstream's debt securities
by nationally accredited ratings organizations; the availability and
cost of financing in the corporate debt markets; the effects of work
stoppages; the effects of litigation, including any litigation with
respect to the above-referenced transactions; and the effects of federal
and state legislation, rules and regulations governing the
communications industry. 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 (SEC)
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 CT Communications and Windstream. In
connection with the proposed merger, CT Communications plans to file a
proxy statement with the SEC. INVESTORS AND SECURITY HOLDERS OF CT
COMMUNICATIONS ARE ADVISED TO READ 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 CT
Communications. Investors and security holders may obtain a free copy of
the proxy statement, when it becomes available, and other documents
filed by CT Communications with the SEC, at the SEC’s
web site at www.sec.gov. Free copies of
the proxy statement, when it becomes available, and CT Communications’
other filings with the SEC may also be obtained from CT Communications
by directing a request to CT Communications, Inc., 1000 Progress Place,
NE, Post Office Box 227, Concord, North Carolina 28026-0227, Attention:
David H. Armistead, Corporate Secretary.
CT Communications, Windstream and their respective officers and
directors may be deemed to be soliciting proxies from CT Communications’
shareholders in favor of the proposed merger. Information regarding CT
Communications’ directors and executive
officers is available in CT Communications’
proxy statement for its 2007 annual meeting of shareholders, which was
filed with the SEC on March 22, 2007. 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.