March 28, 2006 Waltham, MA and Rochester, NY -- Following a February 2006 merger agreement, CTC Communications and Choice One Communications announced they are jointly acquiring Conversent Communications, Inc. , an integrated communications provider with significant facilities and customers in the Northeast as well as in West Virginia.Â
On a combined basis, the three companies currently generate about $800 million in annual revenue and provide telecommunications services to over 150,000 business customers representing more than 1.3 million access lines equivalents.Â According to the companies, the combined company, which will be privately held, will be the second largest competitive communications provider in the U.S., with a heavy regional focus in the Northeast, Mid-Atlantic, and upper Midwest regions. Â The combined entites' network will include 10,000 route miles of fiber and approximately 700 unique collocations.
"These three companies represent a powerful combination," comments Kenneth D. Peterson, Jr., chairman of CTC and CEO of Columbia Ventures. "We are bringing together a rich mix of dense network facilities, leading products, aggressive sales organizations, and world-class employees to create a preeminent telecommunications company. We will have both the scale and the resources to compete effectively with the dominant incumbent phone companies in our markets."
"Business customers tell us that they want a clear, differentiated, and sustainable alternative to the big phone companies," adds Ray Allieri, president and CEO of CTC. "Adding Conversent to our already announced combination of Choice One and CTC creates an even stronger competitor to the incumbent local exchange carriers like Verizon and AT&T. The scale of our new company will give us the ability to further invest in our high touch customer service and next generation network and allow us to expand our feature rich service offerings, particularly in the area of Voice over IP."
The acquisition will be partially funded with an equity investment from Columbia Ventures Corporation (the sole shareholder of CTC Communications) and a corresponding equity investment from existing Choice One shareholders or their affiliates.Â Camulos Capital LP and Varde Investment Partners LP have agreed to backstop the equity investment from the existing Choice One shareholders. Additionally, Goldman Sachs Credit Partners LP has committed to a fully underwritten senior secured credit facility to fund the balance of the acquisition and to refinance existing debt.
"The resources provided by this industry-leading consolidation will facilitate the continued growth and expansion of FiberNet's unique product and service mix," said Jack Pottle, CEO of FiberNet, Conversent's West Virginia business.Â "We are particularly excited about interconnecting FiberNet facilities with those of CTC and Choice One in Pennsylvania, Maryland, and Ohio, expanding our ability to serve multistate business customers."
Conversent has headquarters in Charleston, WV and Marlborough, MA; CTC is headquartered in Waltham, MA; and Choice One is headquartered in Rochester, NY.Â After the merger, the combined company says it will continue to maintain a "major presence" in Boston, Rochester, and Charleston.
The acquisition is subject to customary closing conditions, including regulatory approvals.Â Closing is expected to take place in 90 to 120 days.Â The name of the combined company has not yet been determined.