UPDATED: Transition, 'Not Funeral,' Alltel's Ford Says of Verizon Buy

by Jamie Walden and Gwen Moritz  on Thursday, Jun. 5, 2008 3:15 pm  

The sale of Alltel Corp. to Verizon Wireless is "not a funeral, it's a transition," Alltel CEO Scott Ford said Thursday at a news conference at the corporate headquarters in Little Rock.

But he acknowledged that corporate staff functions that are duplicative of Verizon jobs will likely be eliminated after the acquisition is closed, probably late this year.

The good news, he said, is that Little Rock might become a regional headquarters for Verizon and the existing call center operations, which he put at more than 500 jobs, are likely to be preserved, maybe even expanded.

"A lot of that will depend on how well we do as we show the effectiveness of the integration," Ford said.

Ford said he was surprised when he first learned, about two months ago, that the company that was sold to private investors in November was in play again so quickly. But he confirmed speculation by various observers as to the reason for the quick sale: The lenders that financed Alltel's and other leveraged buyouts couldn't "move the paper."

"We were performing very well and I thought we had a very smooth run in front of us," Ford said. "But the banks, because of the credit crisis that didn't have anything to do with our debt, the banks couldn't move their paper. Because they couldn't move their paper, the debt traded at a discount."

Ford said that allowed Verizon, long seen as possible Alltel buyer, to buy some of the debt at a discount. And, Ford said, it also put liquidity back into the banking system.

"So I think this is one of those things where federal regulators, both at the [Federal Communications Commission] and the [Department of Justice], and the [Federal Reserve] will all look at this and say, 'Thank goodness, this is a great corporate America move for the financial system.'"

In all, the deal means the leveraged buyout investors are getting about 30 percent return on the deal, Ford said. That's against a market that's down 25 percent to 30 percent in the same time frame, he said.

"So they've materially outperformed the market from an investment perspective," Ford said.

Since Verizon's offer, $28.1 billion, is only about 2 percent more than TPG Capital and Goldman Sachs Capital Partners paid for it in November, the return presumably came at the expense of the lenders who had been selling some of the debt at a discount.

Ford said he will leave the company after the transition.

"[Verizon's] press release says I will stay in my current position until close. Period," Ford said. "What happens after 'period' is I leave."



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