Consolidated Communications Reaches a Definitive Merger Agreement to Acquire North Pittsburgh Systems, Inc. for $375.1 Million
02 July 2007 - 10:00PM
PR Newswire (US)
- Expands Consolidated's Markets by Adding over 127,000 Access Line
Equivalents - MATTOON, Ill. and GIBSONIA, Pa., July 2
/PRNewswire-FirstCall/ -- Consolidated Communications Holdings,
Inc. (NASDAQ:CNSL) announced today that it has entered into a
definitive agreement to acquire North Pittsburgh Systems, Inc.
(NASDAQ:NPSI) for $25 per share in a taxable cash and stock
transaction with a total consideration of $375.1 million, based on
Consolidated's June 29, 2007 closing price. This represents a 17.6
percent premium over North Pittsburgh's closing price on June 29,
2007. North Pittsburgh shareholders may elect to exchange each
share of North Pittsburgh common stock for either $25 in cash or
1.1061947 shares of Consolidated common stock, subject to proration
so that 80 percent of the North Pittsburgh shares will be exchanged
for cash and 20 percent for stock. The share exchange ratio is
fixed and is not subject to any collars. Consolidated intends to
finance the cash portion of the purchase price with debt and cash
on hand. Consolidated has obtained a commitment for the financing
necessary to complete the transaction from Wachovia Bank, N.A.
Wachovia Securities is also Consolidated's financial advisor on
this transaction and has rendered a fairness opinion in connection
with the transaction to the Board of Directors of Consolidated. On
a pro forma basis, for the twelve months ending March 31, 2007, the
combined company would have had revenues of approximately $425.5
million, 293,400 ILEC access lines, 66,300 CLEC access line
equivalents, 72,200 DSL subscribers and 1,400 employees. "The North
Pittsburgh team has established a strong reputation with its
customers and in the communities it serves," said Bob Currey,
Consolidated's president and chief executive officer. "North
Pittsburgh delivers an attractive market, a strong network, and a
history of success, providing a solid foundation on which we can
build. Consolidated has a proven track record of combining
telecommunications properties and achieving efficiencies for the
combined company. We believe North Pittsburgh will be an excellent
complement to our Illinois and Texas operations." "For the past 101
years, we have focused on building a high quality integrated
telecommunications business in Western Pennsylvania," said Harry
Brown, president and chief executive officer. "Consolidated is a
leader in delivering innovative products, such as IPTV, to its
markets and we believe this merger provides an exciting opportunity
to expand upon our existing offerings. In addition, we are
confident Consolidated's customer focus will benefit both our
customers and shareholders." The acquisition is not subject to a
financing condition and is expected to close either in the fourth
quarter of 2007 or first quarter of 2008, subject to certain
customary conditions, including approvals from federal and state
regulators and North Pittsburgh's shareholders. North Pittsburgh
will pay its regular July dividend and expects to pay its regular
dividend in October, but has agreed not to pay further dividends.
North Pittsburgh expects to call a shareholders meeting for Fall
2007, at which this transaction will be submitted to North
Pittsburgh's shareholders for approval and the company will hold
its 2007 annual meeting for the election of directors and other
matters. Approval by Consolidated's shareholders is not required.
Strategic Rationale With the acquisition of North Pittsburgh,
Consolidated adds growing, affluent markets that are supported by
an advanced network. The network can be leveraged to increase the
penetration of broadband products and, with limited capital
investment, to rollout video service. Approximately 99 percent of
North Pittsburgh access lines are currently DSL capable and
Consolidated expects to launch its video product in the Western
Pennsylvania markets in 2008. Upon close of the transaction,
Consolidated expects to realize both annual operating and capital
synergies. Operating synergies are estimated at approximately $7.0
million in 2008 and approximately $11.0 million in 2009 and beyond.
Capital synergies are estimated at approximately $3.0 million in
2008 and $6.0 million in 2009 and beyond. In addition, Consolidated
estimates the transaction will be accretive to cash flow by
approximately 6.0 percent (which Consolidated tracks as cash
available to pay dividends), after synergies, in the first full
year of operations. North Pittsburgh Operating Statistics at March
31, 2007 -- ILEC lines were 61,500. -- CLEC access line equivalents
were 66,300. -- DSL subscribers were 16,300. Conference Call
Information Consolidated will host a conference call today, July 2,
2007 at 10:00 a.m. Central Time to discuss the acquisition. The
call is being webcast and both the slides and webcast can be
accessed from the "Investor Relations" section of the company's
website at http://www.consolidated.com/. The webcast will also be
archived on the company's website. If you do not have internet
access, the conference call dial-in number is 1-800-642-1783.
International parties can access the call by dialing
1-706-679-5600. A telephonic replay of the conference call will
also be available starting two hours after completion of the call
until July 5, 2007 at midnight Eastern Time. To hear the replay,
parties in the United States and Canada should call 1-800-642-1687
and international parties should call 1-706-645-9291 and enter pass
code 5047553. Other Information Evercore Group L.L.C. is North
Pittsburgh's financial advisor and rendered a fairness opinion to
North Pittsburgh. Hughes Hubbard & Reed LLP and Thomas, Thomas,
Armstrong & Niesen acted as legal counsel to North Pittsburgh.
Schiff Hardin LLP acted as legal counsel to Consolidated. Safe
Harbor Any statements other than statements of historical fact,
including statements about management's beliefs and expectations,
are forward-looking statements and should be evaluated as such.
These statements are made on the basis of management's views and
assumptions regarding future events and business performance. Words
such as "estimate," "believe," "anticipate," "expect," and similar
expressions are intended to identify forward-looking statements.
Forward-looking statements (including oral representations) involve
risks and uncertainties that may cause actual results to differ
materially from any future results, performance or achievements
expressed or implied by such statements. These risks and
uncertainties include Consolidated's ability to complete the
acquisition, successfully integrate North Pittsburgh's operations
and realize the synergies from the acquisition, as well as a number
of other factors related to the businesses of Consolidated and
North Pittsburgh, including various risks to shareholders of not
receiving dividends and risks to Consolidated's ability to pursue
growth opportunities if Consolidated continues to pay dividends
according to the current dividend policy; various risks to the
price and volatility of Consolidated's common stock; the
substantial amount of debt and Consolidated's ability to incur
additional debt in the future; Consolidated's need for a
significant amount of cash to service and repay the debt and to pay
dividends on the common stock; restrictions contained in the debt
agreements that limit the discretion of management in operating the
business; the ability to refinance the existing debt as necessary;
regulatory changes, rapid development and introduction of new
technologies and intense competition in the telecommunications
industry; risks associated with Consolidated's possible pursuit of
acquisitions; economic conditions in the Consolidated and North
Pittsburgh service areas in Illinois, Texas and Pennsylvania;
system failures; losses of large customers or government contracts;
risks associated with the rights-of-way for the network;
disruptions in the relationship with third party vendors; losses of
key management personnel and the inability to attract and retain
highly qualified management and personnel in the future; changes in
the extensive governmental legislation and regulations governing
telecommunications providers and the provision of
telecommunications services; telecommunications carriers disputing
and/or avoiding their obligations to pay network access charges for
use of Consolidated's network; high costs of regulatory compliance;
the competitive impact of legislation and regulatory changes in the
telecommunications industry; and liability and compliance costs
regarding environmental regulations. These and other risks and
uncertainties are discussed in more detail in Consolidated's and
North Pittsburgh's filings with the Securities and Exchange
Commission, including our respective reports on Form 10-K and Form
10-Q. Many of these risks are beyond management's ability to
control or predict. All forward-looking statements attributable to
Consolidated, North Pittsburgh or persons acting on behalf of them
are expressly qualified in their entirety by the cautionary
statements and risk factors contained in this press release and the
companies' filings with the Securities and Exchange Commission.
Because of these risks, uncertainties and assumptions, you should
not place undue reliance on these forward-looking statements.
Furthermore, forward- looking statements speak only as of the date
they are made. Except as required under the federal securities laws
or the rules and regulations of the Securities and Exchange
Commission, Consolidated and North Pittsburgh do not undertake any
obligation to update or review any forward-looking information,
whether as a result of new information, future events or otherwise.
Prospectus/Proxy Statement This material is not a substitute for
the prospectus/proxy statement Consolidated Communications
Holdings, Inc and North Pittsburgh Systems, Inc. will file with the
Securities and Exchange Commission. Investors are urged to read the
prospectus/proxy statement, which will contain important
information, including detailed risk factors, when it becomes
available. The prospectus/proxy statement and other documents which
will be filed by Consolidated Communications Holdings, Inc. and
North Pittsburgh Systems, Inc. with the Securities and Exchange
Commission will be available free of charge at the SEC's website,
http://www.sec.gov/, or by directing a request when such a filing
is made to Consolidated Communications, 121 South 17th Street,
Mattoon, IL 61938, Attention: Investor Relations; or to North
Pittsburgh Systems, Inc., 4008 Gibsonia Road, Gibsonia,
Pennsylvania 15044, Attention: Investor Relations. The final
prospectus/proxy statement will be mailed to shareholders of North
Pittsburgh Systems, Inc. This communication shall not constitute an
offer to sell or the solicitation of an offer to buy 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 such
jurisdiction. Proxy Solicitation Consolidated Communications
Holdings, Inc and North Pittsburgh Systems, Inc., and certain of
their respective directors, executive officers and other members of
management and employees are participants in the solicitation of
proxies in connection with the proposed transactions. Information
about the directors and executive officers of Consolidated
Communications Holdings, Inc. is set forth in the proxy statement
for Consolidated Communications Holdings, Inc.'s 2007 annual
meeting of shareholders. Information about the directors and
executive officers of North Pittsburgh Systems, Inc. is set forth
in the company's Annual Report on Form 10-K for the year ended
December 31, 2006, as amended. Investors may obtain additional
information regarding the interests of such participants in the
proposed transactions by reading the prospectus/proxy statement for
such proposed transactions when it becomes available. About
Consolidated Communications Holdings, Inc. For more information
please visit http://ir.consolidated.com/. About North Pittsburgh
Systems, Inc. For more information please visit
http://www.northpittsburgh.com/relations.asp. Consolidated Contact:
North Pittsburgh Contact: Stephen Jones Allen Kimble Vice President
- Investor Relations Senior Vice President 217-258-9522
724-443-9583 DATASOURCE: Consolidated Communications Holdings, Inc.
CONTACT: Stephen Jones, Vice President - Investor Relations of
Consolidated Communications Holdings, Inc., +1-217-258-9522, ; or
Allen Kimble, Senior Vice President of North Pittsburgh Systems,
Inc., +1-724-443-9583 Web site: http://www.consolidated.com/
http://www.northpittsburgh.com/relations.asp
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