- All stock, tax-free transaction complements
Consolidated Communications' existing strategy
- Fiber-rich assets enhance strategic growth areas
including: metro fiber, Ethernet, data centers and managed
services
- Improves capital structure and reduces
leverage
- Maintains current dividend with a solid payout
ratio
- Combined company to achieve greater scale and scope as
a more effective competitor bringing more value and expanded
services to customers
Consolidated Communications Holdings, Inc. (Nasdaq:CNSL) and
Enventis Corporation (Nasdaq: ENVE), formerly HickoryTech,
announced that each of their respective Boards of Directors have
approved a definitive agreement for Enventis to merge with
Consolidated Communications. This agreement is an all-stock
transaction in which Consolidated Communications will acquire 100
percent of Enventis' 13.8 million (fully diluted) shares
outstanding in a transaction valued at approximately $350
million.
Under the terms of the agreement, Enventis shareholders will
receive a fixed exchange ratio of 0.7402 shares of CNSL common
stock for each share of ENVE common stock they own. Based on the
closing price of CNSL on June 27, 2014, the consideration
represents $16.50 per share for each ENVE share outstanding
equating to a premium of 17.4 percent over the ENVE closing price
on June 27, 2014 or 27.2 percent over the past 90-day average share
price. Consolidated Communications is maintaining its current
annual dividend policy of approximately $1.55 per share, which it
has consistently paid since its initial public offering in
2005.
On a pro forma basis, the strategic combination results in a
company with approximately $785 million in revenue and $332 million
in adjusted EBITDA (before synergies) for the 12 months ending
March 31, 2014. The additional markets strengthen the
combined company's growth opportunities, enhancing the scale with a
fiber-rich network that extends across 11 states. Together,
Consolidated Communications and Enventis will expand upon the
strong reputations each has built with its customers and in the
communities they serve.
"This transaction combines two companies with similar strategies
and cultures, resulting in a financially strong company with a
robust balance sheet and attractive dividend payout ratio," said
Bob Currey, Consolidated Communication's Chairman and Chief
Executive Officer. "Enventis has built a strong business
delivering competitive business and broadband services over a 4,200
route mile fiber network. The combination and additional
markets creates a broader platform from which to grow and
expand. We look forward to working with the Enventis team to
grow the business."
"For more than a century, both Consolidated Communications and
Enventis have shared a strong commitment to deliver the highest
quality products and services to their customers while maintaining
strong ties to the communities they serve," said John Finke,
President and Chief Executive Officer of Enventis. "This
combination creates a highly competitive company with added scale,
expertise and the ability to provide best-in-class, quality
communication products and services. We believe the transaction is
in the best long-term interests of our company and our
stakeholders."
Enventis is headquartered in Mankato, Minnesota and operates a
next-generation fiber network spanning 4,200 route miles that
enables facilities-based operations in Minnesota and into Iowa,
North Dakota, South Dakota and Wisconsin. It has over 500
employees and has transformed itself with approximately 80 percent
of revenues coming from its business and broadband
services. The company has grown both revenue and EBITDA at a
compound annual growth rate of approximately five percent since
2006. Enventis currently serves approximately 39,000 access lines,
21,000 high-speed internet customers, 12,000 digital TV customers
and 90 fiber-to-the tower sites. The business operates six
data centers and has a full suite of business communication and IT
services including its recent launch of new and expanded cloud and
managed services.
At the end of the first quarter 2014, Enventis had net debt of
approximately $123 million with a leverage ratio of 2.8x debt to
EBITDA. Consolidated Communications has received committed
debt financing in conjunction with the acquisition.
The transaction is expected to generate annual operating
synergies of approximately $14.0 million, which are expected to be
achieved on a run-rate basis by the end of the second year after
close. Consolidated Communications expects to incur merger and
integration costs, excluding closing costs, of approximately $17.4
million in operating expenses and $5.2 million in capital expenses
over the first two years following closing. The merger is
subject to standard closing conditions including federal and state
regulatory approvals and the approval of both Consolidated
Communications' and Enventis' shareholders. The merger is
expected to close in the fourth quarter 2014.
Wells Fargo Securities, LLC acted as financial advisor on the
transaction and rendered a fairness opinion to the Board of
Directors of Consolidated Communications. Schiff Hardin LLP
acted as legal advisor to Consolidated Communications. Waller
Capital Securities, LLC acted as financial advisor to Enventis and
rendered a fairness opinion to the Board of Directors of
Enventis. Stinson Leonard Street LLP acted as legal advisor to
Enventis.
Teleconference and Webcast
Information
Consolidated Communications will host a conference call today at
11:30 a.m. Eastern Time / 10:30 a.m. Central Time to discuss the
merger. The call is being webcast and archived on the
"Investor Relations" section of Consolidated Communication's
website at www.consolidated.com. If you do not have internet
access, the conference call dial-in number is 877-374-3981 with
pass code 68422245. International parties can access the call
by dialing 678-809-1540. A telephonic replay of the conference
call will also be available starting three hours after completion
of the call until July 7, 2014 at midnight Eastern Time. To
hear the replay, parties in the United States and Canada should
call 855-859-2056 and international parties should call
404-537-3406.
About Consolidated Communications
Founded more than a century ago, Consolidated Communications
(Nasdaq:CNSL) provides advanced communications services to both
residential and business customers in California, Kansas, Missouri,
Illinois, Texas and Pennsylvania. Consolidated Communications
offers a wide range of services over its technologically advanced
IP-based network, including local and long distance telephone,
Digital Phone, high-speed Internet access and Digital TV.
Additional information about Consolidated Communications and its
products and services is available at www.consolidated.com.
Safe Harbor
The Securities and Exchange Commission ("SEC") encourages
companies to disclose forward-looking information so that investors
can better understand a company's future prospects and make
informed investment decisions. Certain statements in this
press release are forward-looking statements and are made pursuant
to the safe harbor provisions of the Securities Litigation Reform
Act of 1995. These forward-looking statements reflect, among
other things, our current expectations, plans, strategies, and
anticipated financial results. There are a number of risks,
uncertainties, and conditions that may cause our actual results to
differ materially from those expressed or implied by these
forward-looking statements. These risks and uncertainties
include our ability to complete the acquisition of Enventis and
successfully integrate Enventis' operations and realize the
synergies from the acquisition, as well as a number of factors
related to our business and that of Enventis, including economic
and financial market conditions generally and economic conditions
in Consolidated's and Enventis' service areas; 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;
changes in the valuation of pension plan assets; the substantial
amount of debt and Consolidated's ability to repay or refinance it
or 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; regulatory changes, including changes to subsidies, rapid
development and introduction of new technologies and intense
competition in the telecommunications industry; risks associated
with Consolidated's possible pursuit of acquisitions; 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 and Enventis' 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.
A detailed discussion of these and other risks and uncertainties
that could cause actual results and events to differ materially
from such forward-looking statements are discussed in more detail
in Consolidated's and Enventis' filings with the Securities and
Exchange Commission, including their reports on Form 10-K and Form
10-Q. Many of these circumstances are beyond our ability to
control or predict. Moreover, forward-looking statements
necessarily involve assumptions on our part. These
forward-looking statements generally are identified by the words
"believe", "expect", "anticipate", "estimate", "project", "intend",
"plan", "should", "may", "will", "would", "will be", "will
continue" or similar expressions. Such forward-looking
statements involve known and unknown risks, uncertainties and other
factors that may cause actual results, performance or achievements
of Consolidated Communications Holdings, Inc. and its subsidiaries
to be different from those expressed or implied in the
forward-looking statements. All forward-looking statements
attributable to us or persons acting on our behalf are expressly
qualified in their entirety by the cautionary statements that
appear throughout this press release. 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, we
disclaim any intention or obligation to update or revise publicly
any forward-looking statements. You should not place undue
reliance on forward-looking statements.
Prospectus/Proxy Statement
This material is not a substitute for the prospectus/proxy
statement Consolidated and Enventis 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 and Enventis with the
Securities and Exchange Commission will be available free of charge
at the SEC's website, 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 Enventis Corporation, P.O. Box 3248, Mankato, MN
56002, Attention: Investor Relations. A final proxy
statement or proxy/prospectus statement will be mailed to
shareholders of Consolidated and Enventis.
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 and Enventis, 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 is set forth
in the proxy statement for its 2014 annual meeting of
shareholders. Information about the directors and executive
officers of Enventis is set forth in its proxy statement for its
2014 annual meeting of shareholders. 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.
CONTACT: Consolidated Communications Contact:
Matt Smith
Treasurer & VP of Finance
217-258-2959
Matthew.smith@consolidated.com
Enventis Corporation Contact:
Jennifer Spaude
Director of Marketing, Public & Investor Relations
507-386-3765
jennifer.spaude@enventis.com
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