Hector Communications Corporation Agrees to Be Acquired by Consortium of Minnesota Telephone Companies for $36.40 Per Share
28 June 2006 - 8:38AM
PR Newswire (US)
HECTOR, Minn., June 27 /PRNewswire-FirstCall/ -- Hector
Communications Corporation (AMEX:HCT) today announced that it has
entered into a definitive merger agreement with Hector Acquisition
Corporation (HAC), a recently formed corporation owned by Blue
Earth Valley Communications, Inc., Arvig Enterprises, Inc. and New
Ulm Telecom, Inc. (OTC:NULM) (BULLETIN BOARD: NULM) , three
independent local exchange carriers operating in Minnesota. Under
the terms of the agreement, shareholders of Hector Communications
Corporation (the "Company") will be entitled to receive $36.40 per
share in cash and outstanding options will be cashed out. The Board
of Directors of the Company has unanimously approved the merger
agreement and will recommend that the Company's shareholders
approve the merger when it is presented for shareholder approval at
a shareholders meeting later this year. The Company's financial
advisor, Stifel, Nicolaus & Company, Incorporated provided an
opinion to the Company's Board that the consideration to be paid to
the shareholders of the Company in the transaction is fair to such
shareholders from a financial point of view. HAC has received a
commitment letter from CoBank, ACB to provide the debt financing
required for this transaction. The consummation of the merger
transaction is subject to a number of conditions, including
approval by state and federal regulatory authorities and achieving
working capital and long-term debt levels specified in the
agreement. In addition, completion of the merger is subject to
closing of Alltel Corporation's acquisition of Midwest Wireless
Holdings L.L.C. announced in November 2005. The Company is an owner
of Midwest Wireless and, upon completion of the sale of Midwest
Wireless to Alltel, expects to receive net, after tax proceeds of
approximately $39,500,000. A Delaware court challenge to Alltel's
acquisition of Midwest Wireless was recently dismissed, but the
completion of this transaction is subject to several other
conditions, including FCC and Hart-Scott-Rodino approvals. Based on
information currently available to the Company, and subject to the
satisfaction of all conditions to the merger, it is presently
anticipated that HAC's acquisition of the Company will be completed
in approximately 90 to 120 days. Curtis A. Sampson, Chairman and
Chief Executive Officer stated: "The agreement with Hector
Acquisition Corp. is the culmination of a process we began
approximately one year ago to explore strategic alternatives
available. We believe we have maximized shareholder value through
this process." Hector Communications Corporation is a
telecommunications holding company which through its subsidiaries
provides telecommunications services in rural communities in
Minnesota, Wisconsin and North Dakota. At March 31, 2006, the
Company served approximately 29,400 telephone access lines, 8,000
cable television subscribers and 11,300 internet customers, as well
as having minority ownership interests in many other
telecommunications companies. This release contains forward-looking
statements, including statements regarding anticipated timing of
completing the proposed merger transaction. Such statements reflect
management's best judgment as of this date, but they involve risks
and uncertainties that could cause the transaction to be postponed
or abandoned. Factors that could cause such postponement or
abandonment include, without limitation, (1) the possibility that
regulatory approvals may be delayed or denied or that burdensome
conditions may be imposed in connection with such approvals; (2)
the possibility of customer or employee attrition following
announcement of this transaction; (3) lower than expected revenues
or operating income following the announcement of transaction that
would allow Hector Acquisition Corporation to terminate the merger
agreement; (4) failure to obtain shareholder approval; (6) failure
of Hector Acquisition Corporation to meet conditions related to
obtaining its anticipated debt financing from CoBank, ACB and its
inability to obtain alternative financing for the transaction; (7)
the possibility of adverse changes in global, national or local
economic or monetary conditions, (8) competition and change in the
telecommunications business, and (9) other factors described in our
recent filings with the Securities and Exchange Commission..
Readers should carefully consider those risks and uncertainties in
reading this release. Except as otherwise required by law, Hector
Communications Corporation disclaims any obligation to update any
forward- looking statements included herein to reflect future
events or developments. In connection with the proposed
transaction, Hector Communications Corporation will be filing a
proxy statement and other materials with the Securities and
Exchange Commission. Investors are urged to read the proxy
statement and these materials when they are available because they
contain important information. Hector Communications Corporation
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
Hector Communications Corporation Annual Reports on Form 10-K
previously filed with the Securities and Exchange Commission, and
in the proxy statement relating to the merger when it becomes
available. Investors may obtain a free copy of the proxy statements
and other relevant documents when they become available, as well as
other materials filed with the Securities and Exchange Commission
concerning Hector Communications Corporation these individuals at
the Securities and Exchange Commission's website at
http://www.sec.gov/. These materials and other documents may also
be obtained for free from: Hector Communications Corporation, 211
Main Street, Hector Minnesota 55342, Attn: Paul N. Hanson.
DATASOURCE: Hector Communications Corporation CONTACT: Curtis A.
Sampson, Chairman, Steven H. Sjogren, President, or Paul N. Hanson,
Vice President and Treasurer, all of Hector Communications
Corporation, +1-320-848-6611
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