Windstream to Acquire Q-Comm Corp. in $782 Million Deal

by Arkansas Business Staff  on Tuesday, Aug. 17, 2010 4:33 pm  

Windstream Corp. announced today that it has entered into a definitive agreement to acquire Q-Comm Corp., a privately held regional fiber transport and competitive local exchange carrier based in Overland Park, Kan., in a transaction valued at approximately $782 million.

The transaction includes Q-Comm's wholly owned subsidiaries Kentucky Data Link Inc., a fiber services provider in 22 states, and Norlight Inc., a competitive local exchange services company primarily serving the Midwest. Both KDL and Norlight are based in Evansville, Ind.

The transaction is structured as an acquisition of 100 percent of the stock of Q-Comm by Windstream. Prior to closing, Q-Comm will divest certain assets to its shareholders, so that the remaining businesses acquired by Windstream will consist of KDL and Norlight.

Windstream expects to issue approximately 20.6 million common shares valued at $237 million based on Windstream's closing share price on Aug. 17 of $11.49, and pay approximately $278 million in cash consideration for outstanding equity interests in Q-Comm. Windstream also will repay estimated Q-Comm debt balances of approximately $267 million, net of cash acquired.

Although Windstream expects to have sufficient liquidity in the form of cash balances and revolving credit capacity to fully finance the cash portion of the purchase price and debt repayment, it may choose to raise debt financing in the future, according to a company release.

"This transaction builds on Windstream's strategy to become a next-generation telecom provider focused on broadband and enterprise customers," said Jeff Gardner, president and CEO of Windstream. "KDL's extensive fiber network creates savings for us as well as opportunities to grow business revenues, particularly transport services for wireless carriers."

The boards of both companies have approved the transaction, which is expected to close in the fourth quarter of 2010, subject to certain conditions, including necessary approvals from federal and state regulators.

KDL provides long-haul and metropolitan fiber services to a diverse base of bandwidth intensive customers, primarily serving wireline and wireless carriers, as well as the large enterprise, government, education and medical markets. KDL's contiguous fiber network spans nearly 30,000 fiber route miles in 22 states. KDL has about 400 employees.

Norlight is a competitive local exchange carrier that serves about 5,500 small and medium size business customers primarily in the Midwest. Norlight has about 200 employees.

Windstream and Q-Comm operate in highly complementary markets, and the combination of Windstream's and Q-Comm's capabilities in these service areas will provide significant benefits to their respective operations, according to Windstream.

Stephens Inc. and BofA Merrill Lynch acted as financial advisers and Bryan Cave LLP acted as legal adviser to Windstream on the transaction. RBC Daniels acted as financial adviser and Sonnenschein Nath & Rosenthal LLP acted as legal adviser to Q-Comm.




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