Eschelon Telecom (NASDAQ:ESCH)
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Eschelon Telecom, Inc., (NASDAQ:ESCH) a leading provider of integrated
communications services to small and medium sized businesses in the
western United States, today announced that it has signed a definitive
agreement to be acquired by Portland, Oregon-based Integra Telecom,
Inc., a privately-held integrated communications provider offering
retail services to businesses in Oregon, Washington, Utah, Idaho,
California, Arizona, Minnesota, and North Dakota.
Under the terms of the agreement, which was approved by the boards of
directors of both companies, Integra Telecom will acquire Eschelon for
$30.00 a share in cash, which equates to a total equity value of
approximately $566 million on a fully diluted basis. The acquisition
will be financed through a fully committed senior credit facility
arranged by Deutsche Bank Securities. The transaction is subject to the
approval of a majority of Eschelon’s
shareholders and the satisfaction of customary closing conditions and
regulatory approvals.
Richard Smith, Eschelon’s Chief Executive
Officer stated, “This transaction provides
significant benefits for Eschelon’s
shareholders—the $30.00 share price represents
a 58% premium to our price 90 days ago and it represents a 109%
improvement over our price of just one year ago. Our Associates have
done an excellent job in building value for the company and this
transaction indicates that key goal has been accomplished.”
”We believe the combination will create the
most established, cash profitable competitive local exchange carrier in
our region with increased market strength, greater financial power and
enhanced product choices, well positioning the customers and employees
of both companies for the future. We recognize the value and experience
of the Eschelon employees and look forward to welcoming them to the
combined organization as we join together to build upon the successful
records of both companies and create value through the integration,”
added Dudley Slater, Chief Executive Officer of Integra Telecom.
Eschelon was advised by Latham & Watkins LLP and received a fairness
opinion on the transaction from Jefferies & Company. Integra was advised
by Deutsche Bank Securities with legal counsel provided by Perkins &
Coie LLP.
About the Transaction
The Merger Agreement between the two companies was filed with the
Securities and Exchange Commission on Form 8-K today.
Conference Call at 9:00 AM Central Daylight Time Today
Eschelon will host a conference call for investors and analysts today,
March 20, 2007 at 9:00 a.m. Central Time, to discuss today's
announcement. To listen to the live call, dial 800-257-7063. A
replay will be available through March, 2007 by dialing 800-405-2236
(passcode: 11086744#).
About Eschelon Telecom, Inc.
Eschelon Telecom, Inc. is a facilities-based competitive communications
services provider of voice and data services and business telephone
systems in 45 markets in the western United States. Headquartered in
Minneapolis, Minnesota, the company currently employs approximately
1,400 telecommunications/Internet professionals, serves over 60,000
business customers and has approximately 600,000 access lines in service
throughout its markets in Minnesota, Arizona, Utah, Washington, Oregon,
Colorado, Nevada, Montana and California. For more information, please
visit our web site at www.eschelon.com
About Integra Telecom
Integra Telecom, Inc. provides voice, data and Internet communications
to thousands of business and carrier customers in eight Western states,
including: Arizona, California, Idaho, Minnesota, North Dakota, Oregon,
Utah and Washington. The company owns and operates a best-in-class
fiber-optic network comprised of eight metropolitan access networks, a
nationally acclaimed tier one Internet and data network and a 4,700-mile
high-speed long haul network. The company enjoys some of the highest
customer loyalty and customer satisfaction ratings in the
telecommunications industry. Primary equity investors in the company
include Bank of America Capital Investors, Boston Ventures and Nautic
Equity Partners. Integra Telecom and Electric Lightwave are registered
trademarks of Integra Telecom Inc. For more information, visit www.integratelecom.com.
IMPORTANT INFORMATION
In connection with the merger, Eschelon will file a proxy statement and
other materials with the Securities and Exchange Commission. BEFORE
MAKING ANY VOTING OR INVESTMENT DECISION, INVESTORS ARE URGED TO READ
THE PROXY STATEMENT AND THESE MATERIALS WHEN THEY BECOME AVAILABLE
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Eschelon and its
officers and directors may be deemed to be participants in the
solicitation of proxies with respect to the proposed transaction.
Information regarding such individuals is included in Eschelon’s
proxy statements and Annual Reports on Form 10K previously filed with
the Securities and Exchange Commission and will be included in the proxy
statement relating to the proposed transaction when it becomes
available. You may obtain Eschelon’s proxy
statement, when it becomes available, any amendments or supplements to
the proxy statement and other relevant documents free of charge at www.sec.gov.
You may also obtain a free copy of Eschelon’s
proxy statement, when it becomes available, any amendments and
supplements to the proxy statement and other relevant documents by
writing to Eschelon at 730 Second Avenue South, Suite 900, Minneapolis,
MN 55402, Attn: Investor Relations or at www.eschelon.com
under the tab “Investor Relations”
and then under the heading “SEC Filings.”
Forward Looking Statements
This announcement contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. The
forward-looking statements are based on Eschelon Telecom’s
current intent, belief and expectations. These statements are not
guarantees of future performance and are subject to certain risks and
uncertainties that are difficult to predict. Actual results may differ
materially from these forward-looking statements because of the company’s
history of losses, ability to maintain relationships with RBOCs,
substantial indebtedness, intense competition, dependence on key
management, changes in government regulations, and other risks that may
be described in the company’s filings with
the Securities and Exchange Commission. In particular, statements
regarding the consummation of the merger are subject to risks that the
conditions to the transaction will not be satisfied. In addition, our
results of operations, financial condition and cash flows also may be
adversely impacted by the recent announcement of the proposed
transaction, which may impact our ability to attract and retain
customers, management and employees. We have incurred and will continue
to incur significant advisory fees and other expenses relating to the
transaction. Existing and prospective investors are cautioned not to
place undue reliance on these forward-looking statements, which speak
only as of today’s date. Eschelon Telecom
undertakes no obligation to update or revise the information contained
in this announcement, whether as a result of new information, future
events or circumstances or otherwise.